Lean hog futures hit new contract highs on March 31 and then corrected nearly $25 before bouncing in mid-May.
Market support has come from tight supplies as year to date slaughter is nearly 5% below 2021. However, its being somewhat offset as pork exports are off last year’s record pace, with less China business.
Plus, economic uncertainty is dampening domestic demand. So where are prices headed the rest of 2022 and will we retest contract highs?
Pat VonTersch, Professional Ag Marketing, Luverne, Minnesota says, “Well, the good news, Michelle, is, is that we’re you know, we’re in a lower supply here. We have been all year long down about 5% relative to a year ago. And fortunately, that hasn’t provided for some some elevated cut out values compared to a year ago. And so I think we’re really experiencing some challenges as it relates to the demand side of the equation. I question that the chance of going back to customer as high as, you know, historically this time of year is a good time to be to be looking at some hedging opportunities. And I’m not so sure that this year is a much different. So and that’s the tight hog supply is for the next 30 days or so. But from a seasonal perspective, I would expect to get into a few more numbers as we get later into the third quarter and into the fourth. >
VonTersch says the lean hog futures did allow producers to lock in some profits even with high feed prices, but those margins are below 2021.
