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Lean Hogs are not
physically fit, aerobic pork but the term used to describe hanging
carcasses, trimmed of excess fat and other parts. Unlike Cattle which is
sold by “Live” weight, Hogs are now sold in a post slaughter environment.
Hog slaughter rates
tend to decrease in the first half of the year and increase in the second
half of the year. Couple this pattern with major times of Pork consumption
and the breeding cycle, and the normal behavior of Hog prices becomes very
evident.
* Past performance is not
necessarily indicative of future results. See disclaimer on Page 2 for
further details.
The first half of the
year tends to see price increases, especially from January through April
when a lack of ready supply is met with inventory building in anticipation
of the summer “cold cut” season as well as the Easter holiday. Supply is
lacking this time of the year as Hogs are being farrowed (birthed).
The summer months tend
to see increased slaughter rates as well as demand, but usually the increase
in slaughter outweighs increased consumption. However, traders should take
note that excessive summer breaks – especially in June and August – usually
see strong rallies shortly afterwards.
September marks the
start of the school year and Federal purchases, which support prices.
Couple that demand surge with Christmas Hams, and one can understand how
demand push prices higher in September and November during a period when
slaughter rates are increasing.
The critical factor
for Hog traders to pay attention to is slaughter rates, as this current
supply sets the tone of the market between buyers shopping for price or
simply attempting to secure supply. |
