Weekly Purcell Agricultural Commodity Market Report Wayne D. Purcell Agricultural and Applied Economics Virginia Tech

Need a Product or service?

In hogs, we see some signs of slightly lower prices in early week trade with barrows and gilts down as much as $1.25 in the national direct market on Tuesday morning.

We have a weighted average price of about $45.43 on a carcass basis, which puts us in the $33-$34 price range on a liveweight basis. This continues to be a market that is testing the costs of even the most efficient and largest producers and forcing a negative cash flow on smaller and more nearly high cost producers. That is going to restrain any tendency to come back in with rampant herd building in this market and may indeed, because of cash flow issues, prompt at least some modest continued gilt liquidation on some farming operations.

The February lean hog futures have backed off from their early December highs up around $55 and are trading in the $49-$50 range this week with a Tuesday close at $49.15. I wouldn't be surprised to see some continued move to the downside to the $47-$48 area before this correction of that big move up from August up into December is completed.

Hold your short hedges and don't be anxious to long hedge in this market until we see better signs of bottoming action, possibly in the $47-$48 price range across the next few weeks.