Are hogs waking from their slumber?

Domestically, pork should be a tough competitor with beef for the U.S. consumer dollar.

Dennis Smith

June 3, 2024

2 Min Read
National Pork Board

I see two short term headwinds currently facing the lean hog market. The first is heavy weight hogs. As summer heat comes, weights should drop quickly. The second is the sharply lower value of the Mexican Peso in immediate response to the election of a new president. I’m not a currency expert and thus I’m not sure if the peso will recover much of these losses in the short term. Keep in mind that Mexico is the largest buyer of U.S. pork on the export market.

Otherwise, I see nothing but positive fundamentals for hogs moving into the middle of the summer. Hog numbers are dropping off. Demand for bacon should improve. Exports to Mexico should continue. U.S. pork remains cheap and competitive on the world market. U.S. pork exports should remain strong. Domestically, pork should be a tough competitor with beef for the U.S. consumer dollar.

There is a Quarterly Hog & Pig report scheduled for June 27 . The industry has been culling the herd but not fast enough to override improved efficiency in raising pigs. Thus, due to rapidly increasing pigs per litter, the USDA is projecting pork production for 2025 to rise 1.1% compared to this year. It’s horribly frustrating for the industry to be culling the herd due to massive losses in equity yet still faced with rising production.

Looking ahead, I do project feed costs to continued declining, helping to lower most breakeven costs of production. I’m expecting a seasonal low in futures. In fact, most likely the lows from the last week of June, at $96 basis the July contract, should hold as the seasonal lows. But what is the upside potential for lean hog futures this summer? Basis the July hog contract, I’m expecting the first line of major resistance to come in near $104. In my opinion, unless there’s a bullish surprise in the Hog & Pig report, the April highs ($1.10-$1.11) will not be challenged this summer. Producers may want to look hard at hedging production for next fall and winter on strength this summer. There’s a ton of uncertainty around the corner with an election coming in November.

Smith publishes his evening livestock wire daily. For a free 30-day trial to this information contact him via email.

About the Author(s)

Dennis Smith

Archer Financial Services Inc.

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