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Hog slaughter has declined from 2.45 million head/week in early May to nearly 2.3m hogs currently. Additionally, hog weights have declined at a faster rate than normal, further reducing spot availability.
The market remains highly uncertain. Bellies have been and continue to be a major drag for the wholesale index, accounting for about half of the decline in wholesale prices. With large inventories and expected lower California demand, the price upside risk for bellies is lower than in previous years.
Prop 12 has end users in California depleting inventories of product that will not be compliant by July 2. This is having a negative impact on spot pricing.
Plenty of conversation in the market about producers suffering deep losses and looking to liquidate sows. IA State model shows average loss of $34/head in Q1.
With little improvement in the spot pork market, hog futures continue to slump. But risks are increasing that the market has overshot its mark and prices may snap back.
Lean hog futures have declined by more than 10% in the last few days due to ongoing demand uncertainty this spring.
Pork cutout futures continue to signal lower wholesale prices for the spring and summer as demand eases lower following the COVID-related spike in 2021 and 2022.
Hog slaughter was lower last week as snowstorms disrupted the transportation of hogs to processing facilities. U.S. hog producers are still incentivized to pull hogs forward as current prices are below the cost of production.
The pork market continues to trade sideways on ample supply and, more importantly, a weaker than expected demand across a range of items.
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