Hogs
Price action: Rising wholesale prices again supported hog futures to end the week.
Nearby February hogs rose 57.5 cents to $82.55; that represented a weekly rise of $1.775.
5-day outlook: It’s very likely consumer demand for pork remains very strong, as indicated by this week’s strong rebound in pork cutout. Reduced supplies resulting from holiday cutbacks by the packing industry are probably playing a role in the rise, along with renewed industry interest in hams for use in the weeks and months ahead. After having dipped to $87.83 on Monday, pork cutout resumed its rebound at noon today, rising another $1.54 to $92.02. Surging belly prices seemingly powered much of the gain.
The packing industry is getting back into regular processing this week, but the weekly total is still being compared to a year-ago figure truncated by the New Year’s Day holiday on the comparable Monday. Thus, it’s no surprise this week’s preliminary total smashed its 2024 counterpart by 380,000 head (17.5%). The situation is further confused by the fact that the industry was essentially dealing with three holiday weekends last year versus two this year. We’ll get a much better read on supplies with next week’s results, but we see little reason to think the USDA was incorrect to project modest year-to-year reductions through January. That should offer support for the whole hog and pork complex next week.
30-day outlook: As pointed out previously, hog and pork prices traditionally tend to rally from lows posted late the year prior or in early January to an intermediate seasonal peak in mid-to-late February. That advance may be mitigated or delayed by the late arrival of Easter this year (April 20), which will reduce time pressure on processors and grocers looking to build ham stockpiles for Easter dinner entrees. On the other hand, the late arrival of Ash Wednesday on March 5 will give the industry the opportunity to feature pork more actively before the start of Lent. Conversely, this suggests late winter and early spring demand for the grilling cuts could suffer. If USDA is correct in thinking the number of lighter pigs posted on the December Hogs & Pigs report posted expanded, the supply increase may undermine midwinter prices.
90-day outlook: Supply totals will clearly affect the hog and pork complex during late winter and spring. USDA data indicates modest year-to-year gains will tend to handicap price gains largely powered by seasonally diminishing slaughter totals. Consumer demand seems likely to remain robust, especially if cattle and beef prices continue their recent march higher. Improved consumer sentiment also seems to favor seasonal gains in late winter and early spring. However, if/when grocers become more aggressive in raising pork prices at the retail level, that could badly undercut prices at the wholesale and farm levels.
What to do: Get current with feed coverage.
Hedgers: You have 50% of first-quarter production hedged in February $84.00 puts at $3.35.
Feed needs: You have all soymeal needs covered in the cash market through mid-February. You are hand-to-mouth on corn-for-feed needs.
Cattle
Price action: February live cattle futures rose $1.175 to $198.775, reaching the highest level since September 2023 and on the week up $4.725. March feeder cattle futures rose $1.10 to $269.40, nearer the daily high and hit a contract high. For the week, March feeders gained $5.225.
5-day outlook: Cattle futures set new for-the-move highs again today as the mature bull markets roll on, with no solid, early clues that market tops are close at hand. Strong cash and beef market fundamentals continue to drive futures prices higher. The discount February live cattle futures hold to the cash market will continue to limit selling interest in futures. Cash cattle traded as much as $4.00 to $5.00 higher Thursday as packers continued to bid up for supplies amid negative cutting margins. USDA reported 19,071 steers changing hands for an average price of $202.80 Thursday. The cash market this week will post an all-time high for a second straight week. Today’s noon report showed wholesale beef values up again, with Choice gaining $2.34 to $333.12, while Select jumped $5.22 to $313.57. Movement at midday was 68 loads. Solid gains in the corn futures market today, to a 6.5-month high, may limit gains in feeder cattle futures next week. USDA reported U.S. beef export sales of 5,600 MT for 2025 during the week ended Jan. 2.
30-day outlook: Supplies of market-ready cattle in feedlots are expected to remain tight in the coming weeks, which should limit the downside in cash cattle and futures markets. An increasing rate of “calf-fed” animals being slaughtered during late winter and spring will further reduce the supply of Choice-grade beef. Still, with live and feeder cattle futures prices at record highs, expect to see significant downside price corrections and profit taking from the cattle futures speculators in the coming weeks.
90-day outlook: The U.S. economy continues to surprise analysts with its resiliency. Today’s December jobs report added a solid 256,000 jobs--well above market expectations and the most in nine months. A strong labor market implies better consumer confidence and better demand for beef at the meat counter in the coming months. The December USDA cold storage report showed consumer demand for beef remained robust through November. Having grocers become more aggressive in boosting retail beef prices could stifle consumer demand and undercut the whole complex.
What to do: Get current with feed coverage. Carry all production risk in the cash market for now.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You have all soymeal needs covered in the cash market through mid-February. You are hand-to-mouth on corn-for-feed needs.