Pig outlook: Lean hog futures bulls fading

Analyst Jim Wyckoff shares an update on the US futures market, USDA reports and global pig news
calendar icon 16 December 2022
clock icon 3 minute read

The lean hog futures market slumped this week and prices Thursday hit a two-month low. The bears are in technical control to suggest more price pressure in the near term. Fundamentally, the CME lean hog index is up 6 cents to $81.68 (as of Dec. 13). Bulls are hoping a seasonal low in prices is coming soon. December futures expired Wednesday at $82.325, 70.5 cents above the index, while February futures closed $1.78 above the index, suggesting traders expect cash prices to improve only slightly in the near term. Recent losses in February hog futures suggest bearish attitudes for the price outlook into the end of the year and in early 2023. However, long-term price averages suggest a rebound of approximately $6.00 from late-year lows for the hog index to mid-February highs.

Weekly USDA export sales for US pork

Pork: US net sales of 14,400 MT for 2022 primarily for Mexico (9,600 MT, including decreases of 500 MT), China (2,500 MT, including decreases of 200 MT), Japan (1,600 MT, including decreases of 200 MT), Honduras (500 MT), and Canada (400 MT, including decreases for 400 MT), were offset by reductions primarily for Colombia (400 MT) and South Korea (300 MT). Net sales of 7,700 MT for 2023 primarily for South Korea (4,400 MT), Japan (2,100 MT), the Dominican Republic (600 MT), Colombia (300 MT), and Mexico (300 MT), were offset by reductions for China (200 MT). Exports of 34,200 MT were primarily to Mexico (17,400 MT), China (4,700 MT), Japan (3,200 MT), South Korea (3,000 MT), and Canada (1,700 MT).

China hog futures post worst week on record

China’s most active live hog futures ended the trading week of Dec. 5-9 down more than 9%, their largest weekly decline on record. Heavy slaughter and weak demand put further pressure on spot cash prices, which plunged 17%. The cash hog price plunge came after producers stepped up slaughter volumes in expectation of improving demand toward the end of the year, and after Beijing urged them to ensure stable supplies.

USDA December monthly supply and demand report for pork, beef

The forecast for 2022 red meat and poultry production is raised from last month as higher beef, broiler, and turkey forecasts for the fourth quarter are partly offset by lower pork. Beef production is raised with higher expected cattle slaughter as well as heavier carcass weights. Pork production is lowered on lighter carcass weights.

Beef imports for 2022 are unchanged, but exports are raised on recent data. Exports are raised for 2023 on expectations of continued momentum to East Asian markets. Pork imports and exports for 2022 are both lowered on recent data. Pork imports for 2023 are lowered slightly, while exports are unchanged.

Price forecasts for cattle, hogs, and broilers are unchanged for 2022 and 2023.

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

February lean hog futures--$80.00 to $86.00 and with a sideways-lower bias

March soybean meal futures--$440.00 to $469.30, and with a sideways bias

March corn futures--$6.35 to $.6.60 and a sideways-lower bias

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

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