CME hog futures were higher at Thursday’s open, and still higher at the close. February found good support against unchanged, and then added to gains just ahead of the close, while summer months again marked new contract highs. The lean hog index gained $.52 to $62.75, and Wednesday’s slaughter data projects another $.88 higher.
The pork cutout in 2017 scored an early seasonal low in early October, followed by a counter seasonal rally into December. A secondary late December low has since held, and the carcass value has been steady in the early days of the year. Seasonally, priced tend to trend higher through the first half of the year, and the chart reflects the difference between 1st quarter highs and the previous quarter’s low. The record rally was scored in 2014 on PEDs concerns, and in the following year the 1st quarter high was actually under the 4th quarter low as markets corrected and adjusted. Since 1999, the average 1st quarter high has been $13 over the 4th quarter low, which this year would be equal to a cutout price of $84-87, versus $78.70 on Thursday.