Pig outlook: Lean hog futures bears in command

Analyst Jim Wyckoff shares an update on the US futures market, USDA reports and global pig news
calendar icon 10 February 2023
clock icon 4 minute read

April lean hog futures are hovering near a 13-month low and the bears are in full near-term technical control. There are no solid, early chart clues to suggest a market bottom is close at hand. Fundamentally, the cash hog market fundamentals are improving. The pork cutout value rose 73 cents on Wednesday, though movement slowed to 259.7 loads. The CME lean hog index was up 24 cents to $73.75 (as of Feb. 7)--the fifth straight daily gain and has been up nine of the last 11 days. As cash fundamentals show more signs of a seasonal bottom, buyer interest should start to build in lean hog futures. Lower hog supplies should also provide support for hog prices, amid seasonally lower slaughter levels and lower hog weights.

USDA weekly export sales for US pork

USDA this week reports US pork net sales of 28,800 MT for 2023 were primarily for Mexico (12,700 MT, including decreases of 200 MT), South Korea (4,700 MT, including decreases of 1,200 MT), China (3,400 MT, including decreases of 200 MT), Colombia (1,600 MT, including decreases of 100 MT), and Australia (1,500 MT). Exports of 30,400 MT were primarily to Mexico (14,000 MT), China (4,600 MT), Japan (3,000 MT), Canada (2,100 MT), and South Korea (2,100 MT).

USDA monthly supply and demand report for February

Red meat, poultry, and egg supply and use estimates for 2022 are adjusted to reflect reported December production, ending stock, and trade data. For 2023, the beef production forecast is raised from last month. Slaughter is raised for the first quarter but is partly offset by lower carcass weights as cow slaughter is larger than previously forecast. For the second quarter, steer and heifer slaughter is lowered as fourthquarter 2022 placements were lower than expected, implying fewer animals available for marketing in the second quarter. Lower fed cattle slaughter, coupled with lower average carcass weights, more than offsets higher expected cow slaughter. Pork production is lowered on slightly lighter first-half carcass weights. Broiler production is reduced for the first three quarters based on recent hatchery data and the current pace of slaughter. Turkey production is unchanged. Egg production is reduced slightly on recent layer flock data and slower-than-expected production growth in December 2022.

Beef imports for 2023 are raised for the year with a higher first-quarter forecast partially offset by lower second-quarter imports. The beef export forecast and the pork trade projections are unchanged. Broiler imports and turkey exports are both lowered. Egg imports are projected higher. For 2023, cattle prices are raised on expected strength in first-half demand for fed cattle in the face of tightening feedlot numbers. Hog prices are lowered for first-half 2023 reflecting current price movements. First-half broiler prices are projected lower on weaker-than-expected prices thus far in 2023. Egg prices for the first quarter are raised on recent prices.

A warning about China’s hog industry

“U.S. hog farmers look at the pictures of those farms in China, and they just scratch their heads and say, ‘We would never dare do that.’” — Brett Stuart, founder of the research firm Global AgriTrends, is worried about disease risks from China’s high-density pig farms, which in some cases pack the animals into tower blocks, according to a report by the New York Times.

China to replenish pork reserves to stabilize market

China will stockpile pork to replenish state reserves, as pork prices triggered a warning level. The national average of pork prices against grain prices, was 4.96 between Jan. 30 and Feb. 3, falling below the warning level of 5, the National Development and Reform Commission said. China has a three-level warning system for excessive ups and downs in hog prices. The commission said it would work with relevant departments to immediately start the stockpiling work for state reserves and guide local governments to purchase pork.

China’s hog numbers continue to rise

China’s sow herd increased 0.6% in December from November to 43.9 million head, according to ag ministry data. Sow inventories rose 1.4% from the end of 2021. China’s pig herd increased 1.9% in December from the month before to 452.6 million head and was 0.7% larger than the previous year.

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

April lean hog futures--$80.00 to $87.00 and with a sideways-lower bias

March soybean meal futures--$470.00 to $500.40, and with a sideways bias

March corn futures--$6.70 to $7.00 and a sideways-higher bias

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

Sarah Mikesell


Sarah Mikesell grew up on a five-generation family farming operation in Ohio, USA, where her family still farms. She feels extraordinarily lucky to get to do what she loves - write about livestock and crop agriculture. You can find her on Twitter or LinkedIn.

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