Foodservice Edition

Hog prices trending higher but ample supplies expected to keep prices in check, offer opportunities to promote pork in 2018

Pork packers have been paying up for hogs in recent days and the turn-a-round in cash hog prices has bolstered both nearby and deferred futures contracts. The October contract closed on Friday at over 60 cents per pound, 500 points higher than where it was in late September. Why are pork packers paying up for hogs even as, by all accounts, hog supplies are plentiful should establish new record levels through the end of the year?

In two words: better demand. Packer margins are in excellent shape and despite all-time record pork supplies coming to market the pork cutout today is trading at the same level as it was a year ago. Hog processors are in the business of processing hogs. As long as they can make money doing that, they will look to run at maximum capacity. From the hog trading perspective, producers have managed to become more current and the increase in slaughter capacity has helped