Emotions were more tempered in the hog trade on Thursday, with an early break finding support though rallies failed to get much traction. Prices at the close were lightly mixed, but little changed for the day, while the hog index gained $.54 to $75.38 and is estimated another $.25 higher for Friday.
The February WASDE made few changes to the pork estimates. 1st quarter production was fractionally lowered as slaughter has so far been just short of the USDA’s expectations, while the price forecast increased by $1 to $49-51. However, Jan-Mar production will still be up 3% year over year, and also record large. No other significant changes were made to the pork estimates, though the USDA maintains a record large export forecast of 5,900 Mil Lbs. But while exports are expected to increase by nearly 270 Mil Lbs, annual pork production will jump by just over 1,300 Mil Lbs.
This increase to record large production through the entire year presents significant price risks. We still think summer prices back to $85 or better should be sold, while December hogs over $65 should be use for 4th quarter sales.