Pork Profit Maximizer – Food Service Edition

Highlights

The nearby CME Lean Hog August futures contract closed on Friday at $57.70/cwt, a 25% decline in just over a month. Fall and winter contracts have also followed suit, with December now trading at around $46 Clearly the catalyst for the decline is the imposition of retaliatory tariffs from Mexico and China, both major buyers of US pork. However, the effect of these tariffs should be seen in the broader context of expected record pork supplies this fall, the potential for record corn yields and continued expansion in the pork industry. But despite this generally bearish context, it appears that some short-term factors have further contributed to dramatic value erosion of the last few weeks.