Heavy Animals Weigh on Hog Futures

After a four-year price rally in spot hog prices, increasing Chinese output and heavier and more numerous animals in the US pork supply are creating a surplus that suggest lower hog (futures) prices are imminent.

USDA estimates US farmers will produce almost 120M pigs this year (the most in about 50 years) while world hog production reaches an all-time high of almost 105M metric tons!  Analysts suggest another 10% lower in hog (futures) prices by the end of the year.

Chris Hildebrand, vice-president of trading at HighGround Trading Group in Chicago, stated today regarding the current hog futures situation, “There is a lot of pork in the system, no pun intended. After the last 2 year rise in (pork) prices, farmers have raised more and larger hogs leading to a surplus. Look for the trend to continue down for the near term.”

Hog futures have already seen record high prices, and the current trend is already down.  Before I can sell short hog futures once again, I need a pull-back higher in (pork) prices or a lower risk trade opportunity.  I am being as patient as I can possibly be


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