Pork Price Trends

We estimate the March 1 hog inventory  at 69 million head compared to 68 million head a year ago. Our estimate assumes the USDA December/February sows farrowing forecast published in December and a trend estimate for pigs per litter.

The accompanying study shows the April/June average cash porkcut out as a function of a model forecast based on the March 1 market hog inventory and US pork exports. Note that the point for 2020, which is based on currently available data including the cash price for pork cutout of $64/cwt. is low on the scatter which suggests considerable upside price potential. The cash pork cut has a strong season tendency to advance into the spring when BLT and barbecue increases pork demand.  

The lean hog index follows the pork cut most times, but the second half 2019 was an exception. Strong pork  export demand and an ample live hog resulted in slaughter capacity being stretched and processed product (pork cut out) trading at a wider premium to the raw product (represent by live futures) than history would suggest.