The cash price for hogs has been lower than expected in 2023.
Paul Marchand is the Senior Risk Management Analyst with H@ms Marketing Service.
He says there are a couple of key factors pressuring cash prices significantly.
Exports are higher than they were a year ago, (but not as high as they were in 2021) and we're also dealing with much higher supplies than what the USDA anticipated in their quarterly Hogs and Pig Report in the summer.
"The USDA has suggested that we were going to see less hogs than a y. ear ago come to the marketplace. and that demand would be relatively solid. By themselves, we have a lower supply compared to a steady demand sort of situation. You would quite reasonably expect hog prices to be higher in 2023 compared to 2022 and that hasn't happened. "
He notes the forward hog contracting prices are also under quite a bit of pressure and are undervalued.
"Using 2022 as the comparison, futures were at $120 US cwt and we now have June futures at $85cwt. So a significant discount."
Marchand notes every producer's strategy and operation are different, but it's pretty clear that the prices that are currently available in the futures market if producers choose to lock them in would be at a discount to their breakeven costs.