Is the February rocket ship back?Is the February rocket ship back?
It’s easy to say pork demand is hot because production is very close to year ago levels but cash hog prices, pork cutout value are substantially higher than this time last year.
December 2, 2024

A little over a year ago I predicted a rocket move higher in February lean hogs and it actually happened. This year, in my opinion, the fundamental landscape is bullish enough for rocket ship #2.
So, why am I bullish? First, and the easiest to see is the fact that pork production roughly since Oct. 1 has been running well below projections based upon the September Hog and Pig Report. In fact, numbers have been running as much as 3% to 4% lower than projected. The report projected December hog numbers to be up 3% and then for numbers to drop off after the first of the year, running down 1% to 2%.
I’m hearing that packers will be aggressively looking for hogs to kill this week, the week after Thanksgiving. Normally after the slaughter disruption due to Thanksgiving always falling on a Thursday, disrupting the kill on Thursday, Friday and Saturday, there’s plenty of hogs to kill in the week following. Many, if not most of the years, the week after Thanksgiving is the largest weekly kill of the entire year. Producers are current as measured by average live hog weights. The latest data showed weights running 1.2 pounds lower than the same week last year.
Exactly how or why the USDA posted such a big miss in the September report remains a mystery. No doubt the December report will contain some revisions but I’m more interested in exactly how/why the overcount occurred. The entire trade is currently wondering if market hogs will run down 1% to 2% after the first of the year or will they run down 3% to 5%? We know for a fact that the industry has lost a great deal of equity over the last three years. Recent Hog and Pig reports measured some contraction but vastly improved efficiencies in pig production, specifically through rising pigs per litter, kept production from falling. My guess is that somehow this measure has been inaccurate over the last couple of quarterly reports. The result is fewer pigs than expected.
On the other side of the coin, we know that demand for U.S. pork is red hot. U.S. pork is currently the cheapest pork in the world. The U.S. pork industry is picking up new export business from Central and South America, filling a massive hole left by the EU. Pig prices in Mexico, our largest export customer is substantially higher than in the U.S. Despite a strong dollar and weak Peso, look for strong exports to Mexico to remain intact, barring a tariff trade war. China is not expected to become a major buyer of U.S. pork next year. But there’s plenty of other countries looking for inexpensive protein.
Domestic pork demand has been excellent too. Pork is priced extremely competitively versus beef. Retail beef prices remain record high. The strong demand can be clearly seen in recent cold storage reports. Year-to-date slaughter is up about 1% with production up slightly more than 1% with heavy hog weights in the first half of the year. However, total pork in cold storage is down 3% at the end of October compared to one year ago. Hams are up 2% but belly stocks are down 42% from last year. Loin stocks are down 1%. These three primal cuts make up the majority of the hog carcass.
It’s easy to say that pork demand is hot because production is very close to year ago levels but cash hog prices and the pork cutout value are substantially higher than this time last year. The hog carcass, for any November, was record high. The final hog carcass of the month, calculated at $90.31, compares with last year at the end of November at $84.98. That’s an increase of just over 6%.
December lean hog futures have rallied $20 off the lows from last August. They’ve moved from $64 to $84 with current prices at $82. This contract goes off the board in two weeks on Dec. 13. The latest index resides at $85.21.
Assuming hog numbers will stay short during December, I'm expecting the December futures to expire on their highs and likely go off between $85 and $86. The February hog contract will trade well above $90 this winter, in my opinion. I recommend trading accordingly.
Smith publishes his evening livestock wire. For a free 30-day trial to this information flow that also includes a morning livestock report and a midday pork and beef update, please send an email to: [email protected].
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