Lean Hog Prices Are Sizzling Higher as Cattle Prices Flag Risk of Collapse

August lean hog (HEQ26) futures last week gained $2.175 while hitting a nearly four-week high. August hogs posted a strong rebound last Thursday to produce a technically bullish weekly high close that will likely keep the chart-based bulls energized this week. Bulls are keeping alive a fledgling price uptrend on the daily bar chart, to suggest still more upside potential in the near term.

The latest CME lean hog index is up 24 cents to $91.48. Today’s projected CME index price is up 18 cents at $91.67. The national direct five-day rolling average cash hog price quote for last Thursday was $96.98.

Cash hog and pork market fundamentals remain mixed as ample supplies meet demand. Hog slaughter and pork production are steady to slightly lower than one year ago. However, heavier carcass weights have kept the pipeline well supplied. Sharp price swings in bellies, fueled by improving bacon demand and rising cold storage stocks, have been a main driver of recent pork cutout stability.

The potential for higher-for-longer beef prices at the meat counter could result in better consumer demand for pork into 2027. But unlike cattle, hogs are in a gradual supply- growth and productivity-driven expansion, helping to keep hog futures under pressure.

Cattle Futures Markets Bulls Are Fading Fast

August live cattle (LEQ26) futures last week hit a three-week low and for the week were down $6.60. August feeder cattle (GFQ26) futures for the week lost $9.225. The cattle futures markets bulls faded badly during the holiday-shortened trading week, including technically bearish weekly low closes on Thursday, which set the stage for follow-through, chart-based selling pressure this week. Both live and feeder cattle futures markets are trending down on their daily bar charts, which suggests the path of least resistance for prices will remain sideways to lower in the near term.

Lower cash trade last week also pressured futures prices. Cash cattle trading turned moderately active as of midday last Thursday, with USDA reporting steers averaging $255.25 and heifers $255.35. That compares to the prior week’s USDA-reported cash cattle trading average of $259.34. 

The New World screwworm threat and recent heat have offered little support to cattle futures. A pullback in boxed beef values has worsened already negative packer cutting margins, which will continue to result in lower capacity utilization and reduced slaughter totals. Many retailers were heading into the Fourth of July holiday with light inventories to efficiently meet consumer demand. Expect supply tightness to persist, with short-term downside risk from technical selling.

Boxed beef values slid late last week, flying in the face of a CNBC feature last week that said beef prices are rising, along with consumer demand. It could be that the supply-bullish aspect of New World screwworm has been baked into futures prices, with the possibility that in the coming weeks growing cases in the U.S. could at some point negatively impact consumer psychology, especially after peak grilling season winds down in August.

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