Lean Hog Futures Retreat on USDA Supply Insights

gas_fee_therapist · 2025-12-31T14:57:32+00:00

The lean hog futures market experienced declines amid mixed supply signals from USDA data. Despite a slight gain in the CME Lean Hog Index, February contracts fell, reflecting constrained trading volumes. Supply data showed rising hog populations but low pork inventories, indicating tighter markets. Increased processing activity pressured wholesale values, while speculative funds increased their lean hog positions, indicating potential market interest despite price weaknesses.

gas_fee_therapist

2025-12-31 14:57:32

Abstract generation in progress

Weakness gripped the lean hog futures market on Wednesday, with losses ranging from 20 to 70 cents across contracts as traders digested fresh government data. The backdrop: USDA’s commodity surveillance efforts painted a complex picture of domestic supply dynamics.

Market Positioning and Price Action

The CME Lean Hog Index posted a modest one-cent gain on December 22, settling at $83.72, yet this couldn’t offset broader selling pressure throughout the session. Trading volume remained constrained ahead of the CME’s early closure, with no activity slated for Thursday. The February 2026 contract dropped $0.700 to $85.275, April fell $0.325 to $89.950, and May declined $0.200 to $93.650 per hundredweight.

Supply Data Signals Mixed Conditions

Tuesday’s quarterly inventory report from NASS revealed total hog populations at 75.55 million head as of December 1—a 0.63% year-over-year increase. The category split showed market hog populations rising 0.75% to 69.59 million head, while breeding stock contracted by 0.87% to 5.952 million head.

Cold storage data provided a more intriguing signal: November 30 pork inventories hit 371.27 million pounds, marking the lowest November tally since 1997 and the minimum monthly reading since June 2004. This supply tightness contrasted with rising live animal numbers, suggesting accelerated processing activity.

Processing Activity and Carcass Economics

Federally inspected slaughter reached 492,000 head on Tuesday, with the weekly aggregate climbing to 988,000 head—20,000 units above the prior week’s pace. This uptick in kill rates put pressure on wholesale values: USDA’s pork carcass cutout declined $2.70 to $93.99 per cwt on Wednesday. Among specific primals, ham and belly absorbed the largest losses, with belly dropping $14.37 per hundredweight.

Managed Money Positioning

Speculative funds demonstrated renewed interest in lean hog exposure, adding 13,365 contracts to their managed money net long position during the 12/16 week, bringing total positioning to 64,836 contracts. This tactical accumulation occurred despite Wednesday’s price weakness, suggesting selective opportunism among large traders.

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