As usual, the USDA Carlot report is of limited use given that many items continue to go unquoted. It is a stark contrast to what is happening in the beef complex which has been significantly more transparent since the mandatory reporting was put in place.

The latest USDA report put the pork cutout at $78.63/cwt, $2.44/cwt higher than the previous close and a little over $6 higher than the previous week. Cutout values have been steadily increasing since the beginning of the year on very firm prices for pork trimmings, hams, and more recently loins. Hog slaughter in the first three days of the week is running about 1 per cent higher than a year ago but hog supplies since the beginning of the year have been notably lower than previously expected, a result of both lower slaughter and lighter animals coming to market.

The CME lean hog carcass futures closed lower on Wednesday but the market will likely be buoyed by the steady gains in cutout values. As hog futures are approaching contract highs, the market has clearly become much more cautious. Those that hold a more bearish view of the market think that it is due for a correction but no break will come as long as the wholesale market remains on fire.