Hog Market

The USDA estimated the market hog inventory December 1, 2019 at almost 71 million head compared to less than 69 million head at the same time a year ago. The number easily exceeded the trend established the previous 40 years.

Pork export demand is at an all time high due to African swine fever cutting hog numbers in half in some areas.

The large supply of US hogs, strong pork demand and limited slaughter capacity has provided packers with a bonanza. We have charted the pork cutout and the deliverable hog value for the last three years.

We have developed several price models forecasting first quarter hog prices. The study we publish here uses the number of market hogs on December 1 and first quarter U.S. pork exports as independent variables and the average price of cash hog\s at farm level as the dependent variable . The study projects a $55/cwt average for the January/March 2020 period.

The futures market has built in a $12 rally in deliverable hog prices this quarter. Hog producers will probably enjoy a more profitable first quarter than a year ago, but we doubt the futures market will display much strength with packer margins still wide compared to historical experience.