Thursday was another sharply mixed day of trade that left April hogs slightly higher at the close. Summer hog contracts fell to new lows early in the day, but recovered and were closer to the highs at the end of the day. The lean hog index rose by $.14 to $67.66, and is estimated 2 cents lower for Friday.
The March WASDE does not typically provide significant changes to the pork estimates, as the USDA tends to wait until after the March 1 inventory data is available, to adjust their forecasts. Production in the first half of the year was fractionally lowered as slaughter rates were behind the USDA’s expectations, but 1st quarter production is still estimated 3% over a year ago, and 2nd quarter is estimated up 5%. Output is expected to be record large in every quarter, with the largest increase in Q4, where the USDA estimates an 8% year over year increase.
The cash hog market looks to be bottoming, and a spring rally should be underway in the coming weeks. We target $81-84 for a summer high, while December rallies back to $65 should be used for 4th quarter sales.
