The pig traders’ perspective: April lean hog futures posted a key bearish reversal on Wednesday and there was strong follow-through selling pressure on Thursday. This is one technical clue that a market top is in place. However, the market has brushed off such bearish daily price moves in the recent past. That makes price action the rest of this week extra important. A late-winter pullback before the market rallies to its summertime peak is rather typical for the April hog futures. The CME Lean Hog Index had recently been rising sharply, but has stalled this week. Seasonal factors suggest steady-to-lower cash price action from mid-to-late February into early April. Whether that historical pattern will hold this winter-spring is open to question, especially after the market proved very strong during that period in 2021. Having hog supplies running 6% under year-ago, as implied by the December USDA Hogs & Pigs report, should prove price supportive.

Latest US Department of Agriculture (USDA) reports, and other news

Bullish USDA pork report

USDA’s latest monthly Cold Storage Report showed a smaller-than-normal build in frozen pork stocks during January. Frozen pork inventories at 428.5 million lbs. rose 32.0 million lbs. (8.1%) from December, far less than the five-year average gain of 56.7 million lbs. during January. Pork stocks were 29.0 million lbs. (6.3%) under year-ago and 121.7 million lbs. (22.1%) less than the five-year average. Beef stocks totaled 526.4 million lbs., up 19.3 million lbs. (3.8%) versus December, whereas the five-year average was a 2-million-lb. decline during the month. Beef stocks were 7.1 million lbs. (1.4%) above January 2021 inventories but 14.9 million lbs. (2.9%) under the five-year average.

USDA annual ag outlook highlights

Following are nuggets from the annual USDA Ag Outlook Conference that began Thursday.

Hogs/Pork: Commercial production is seen at 27.38 billion pounds (down 1% from 2021) with lower hog numbers lightly offset by higher carcass weights. Pork exports are seen declining to 6.81 billion pounds with imports at a record 1.31 billion pounds. The national base 51% -52% lean, live equivalent prices is seen at $65 per cwt.

Cattle/Beef: Beef production for 2022 is forecast at 27.38 billion pounds (down 2% vs 2021) with higher weights only partly making up for lower slaughter numbers, with total beef exports of 3.27 billion pounds and imports at 3.37 billion pounds. The 5-area steer price is seen at $137.5 per cwt. in 2021.

The next week’s likely high-low price trading ranges:

April lean hog futures--$102.50 to $110.00, and with a sideways bias

May soybean meal futures--$450.00 to $487.00, and with a sideways bias

May corn futures--$6.80 to $7.25, and a sideways bias

Latest analytical daily charts lean hog, soybean meal and corn futures