Forecasting Winter/Spring June Lean Hog Price Range – 12/3/2023

USDA has projected a modest increase in US pork production in 2024. An increase in US pork exports would absorb about half of the increase in projected pork production based on the USDA’s US pork supply/usage balance  published in early November 2023.

USDA’s 2024 pork production estimate will be refined as data from the December, March and June Hogs and Pigs surveys is evaluated. We don’t have a basis to dispute USDA’s production projection. USDA’s pork export forecast seems doable, but optimistic in the absence of major pork sales to China.  

We have developed the accompanying scatter studies which set the winter/spring high and low for June lean hog futures prices as a function of the US per capita pork supply as estimated by USDA at mid-year. Recent historical price data has been adjusted to 2024 level basis the implicit price deflator for GDP. 

The scatter study suggests a low of $75 and a winter/spring high of $100 per hundredweight. In the past 20 years the June lean hog futures contract has displayed an average winter/spring price range of $22 with a maximum range of $56 and a minimum range of $10 Cwt. USDA forecasts hog prices at farm level. Farm level hog values are less than 70%,  but correlated with deliverable hog prices. In the November 2023 WASDE report USDA forecast farm level hogs would average $63/Cwt. In the April/June 2024 period compared to $57 in the same quarter a year ago and $76 in April/June 2022.