Smaller Herd Boosts Hog Futures

With feed costs near record highs, domestic hog producers are taking their herds to slaughter at a pace not seen since 2009.  Hog farmers are realizing their biggest losses since the late ’90’s which will ultimately lead to higher pork prices because of a significant smaller herd.

Hog farmers are expecting losses of up to $44 per animal in the fourth quarter after crop damage from drought sent corn-feed prices soaring.  The situation for hog farming is so bad, even two Canadian-based hog farming operations have filed for bankruptcy.

Higher feed costs and lower margins will drive consolidation and reduction of inventory in the hog industry. Going forward, the fundamentals of this market should set the tone for a bullish (hog futures) trend,” said Kevin Craney, a senior commodities broker for RJO Futures in Chicago, regarding the current hog futures situation.

The trend for hog futures has turned upward only late last week.  I would like to see more of a pull-back in hog futures before initiating a long position.

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