You are here

What Happened to Hogs?

Hog futures were in a steep and extended uptrend for many months after PED (Porcine Epidemic Diarrhea) virus broke in January, affecting many hog producers. Initial estimates suggested a reduction in hog supplies by 4 to 6%, and, in some circles, estimates went up to 10 or even 15%. Yet, year-to-date, hog production is down roughly 1.13%. Hog futures prices are now entrenched in a steep downtrend since peaking in early July. As of this writing, October hogs are trading near $101.50, well below the recent peak of  $118.35, or a loss of nearly $18.00. Front-month August hogs peaked at $133.37 on July 1 and is now trading under $116.00, a $17.00 drop.

So what happened? As with any market anticipating a short-fall of supply, we believe two things occur. Both can relate to the basic laws of economics. In essence, high prices cure high prices. First, high prices led to behavior by producers that wasn't anticipated. Both packers and producers agree that heavier hogs could help fill the void of small supplies. While slaughter numbers have certainly been on a decline the last six to eight weeks, fulfilling the expectation of tight numbers, added weight for the last six months has helped to pressure futures due to extra inventory. On the flip side, prices moved to such a high level (nearly 30% above expected prices from earlier in the year), that demand has diminished as well. In the end, it's not a shocker that the hog market is trending downward at a window of time when slaughter numbers are on the decline and expectations are for tighter inventory. The point is, the market already factored this in well in advance.

It's not unusual for markets to be well ahead of the game. Traders like to buy uncertainty, but as facts become more known, they begin to move out of long positions and go short. The old saying, "Buy the rumor and sell the fact" seems to have merit with recent activity in the hog market.

If you have questions or comments, or would like help implementing strategy for the year ahead, please contact Bryan Doherty at 1-800-TOP-FARM ext. 129.


Futures trading is not for everyone. The risk of loss in trading is substantial. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Past performance is not necessarily indicative of future results.

Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. Hypothetical performance results have many inherent limitations. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. No representation is being made that scenario planning, strategy or discipline will guarantee success or profits. The data contained herein is believed to be drawn from reliable sources but cannot be guaranteed. Reproduction of this information without prior written permission is prohibited. This material has been prepared by a sales or trading employee or agent of Stewart-Peterson and is, or is in the nature of, a solicitation. Any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to Stewart-Peterson. Stewart-Peterson refers to Stewart-Peterson Group Inc. and Stewart-Peterson Inc. Stewart-Peterson Group Inc. is registered with the Commodity Futures Trading Commission (CFTC) as an introducing broker and is a member of National Futures Association. Stewart-Peterson Inc. is a publishing company. A customer may have relationships with both companies. Accordingly this email is sent on behalf of the company or companies providing the services discussed in the email.

Read more about

Talk in Marketing

Most Recent Poll

Will you plant more corn or soybeans next year?