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We remain positive for the hog market with expectations of rising cash markets into mid-February but are concerned with the potential for a jump in near-term meat supply if Russia bans US poultry for too long. The supply of US pork will be a little higher than expected ahead due to the negative USDA report from last week which showed record high pigs per liter reported for the last quarter. This helped turn the neutral report from the USDA to a somewhat negative report as pigs per liter were up 2.6% from last year. This left the total US hog herd at 2% under last year and down 3.5% over the past two years. Many traders believe that there are still too many hogs around to provide for at least some profitability ahead for producers. However, June hogs are already at 77.50 and demand has dramatically improved in the past six months so the future is very uncertain. February hogs closed slightly lower on the session on Thursday after choppy and two-sided trade. Weakness in the pork product market and a slightly negative USDA Hogs and Pigs report helped to spark some selling pressures but ideas that the cash market will trade higher this week and talk of bitter cold weather in the Midwest helped to support. February 2010 hogs closed 2008 at 70.15 and closed 2009 at 65.60. A firm tone for cattle and talk that pork supplies will tighten into the middle of February helped to support.
The CME Lean Hog Index as of December 29 came in at 62.59, down 8 cents from the previous session and down from 64.42 the week before. The estimated hog slaughter came in at 374,000 head on Thursday. This brings the total for the week so far to 1.678 million head, up from 1.494 million last week at this time and up from 1.243 million a year ago. Pork cut out values, released after the close yesterday, came in at $67.39, up 7 cents from Wednesday but down from $67.86 the previous week. Feeder pig imports from Canada through late December reached 4.95 million head, down 23.6% from the same period in 2008. Cash hogs were higher late last week and are called steady today.
TODAY’S GUIDANCE: Buying support for February hogs comes in at 64.80 and 64.52 with 65.85 and 66.40 as resistance.
