Hogs Break Down to New Low
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December Lean Hogs opened lower and rallied to the session high at 60.475. It reversed course and grinded lower the rest of the session to the low at 57.775. It settled just above the low at 58.175. The rally tested resistance at 59.825. The break down took price to a new low for the down move as cash conditions continue to be weak. The weakness in the cash market has been sparked by strong production and weak US consumer demand. This has sent December futures down to low we haven’t seen since the pandemic in 2020. We haven’t even reached peak seasonal supplies, which normally occur in the next month. This has depressed prices and has funds taking huge short positions in futures. It is a good thing we have had good to strong exports or who know what will have happened to the price action. Exports have been the savior for the pork industry and in particular Mexico. Last week’s report had Mexico up at 23,300 MT and our total sales at 42,300 MT. This was up 13 % from the previous week and 24% from the prior 4-week average. Exports have been an important feature for producers as we haven’t been able to grow our consumption in the States. We remain in the 49 – 50 # area of consumption per person in the US and it doesn’t seem like it will increase into the next year according to the USDA. So, our exports have to keep improving and the US Export Federation has been doing a good job of marketing our pork and we have seen our exports to South America grow. Maybe, we should get the organization to market pork to the US consumer. Our cutout and cash indices are ridiculously low and futures are oversold, in my opinion. Hopefully we find a bottom real soon and get some short-covering to take place. We have Thanksgiving coming up so maybe we can see a surge in demand for ham. We’ll see!... The breakdown took price past support at 58.25 with the low and settlement below the support level. A failure from settlement could see price test support at 57.025. Support is nearby at 56.775. If price can re-take 58.25 resistance, it could re-test resistance at 59.825. Resistance then comes in at 61.85.
The Pork Cutout Index decreased and is at 72.13 as of 10/30/2026.
The Lean Hog Index decreased and is at 66.57 as of 10/29/2026.
Estimated Slaughter for Monday is 492,000, which is above last week’s 484,000 and below last year’s 496,398.
Trade Idea:
Buy the February 2027 Lean Hog 70 call
Sell the February 2027 Lean Hog 76 vs 70 put spread.
Cost to Entry - $1,600 credit plus commissions and fees.
Margin $760 per spread.
Maximum risk at option expiration : $800 plus trade costs and fees.
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Ben DiCostanzo
Senior Livestock Analyst
Walsh Trading, Inc.
Direct: 312.957.4163
888.391.7894
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