Lean Hog Fundamental Support
There are only a few hours left before heavy winter snows and high winds hit hog country. There was industry talk circulating yesterday that a few hog plants were already telling employees to stay home today.
We have heard that Tyson's plants in Perry, Storm Lake, and Madison will be down. We have heard that Smithfield's Crete, Nebraska plant will be down as well (Farmland). The worst of the snows will be in far Eastern Nebraska with more moderate amounts for Iowa.
On the futures end the February contract is set for expiration next Friday. Our target expiration price is $66. The lean hog index, the measure of cash hog prices for futures, is at $61. We don't see any major problems with our target at this time.
Aside from tonight's snow storm, which is normally a buy the rumor/sell the fact issue for the hog market, we don't have a lot of big bullish news right now. Hog slaughter certainly will decline into summer as is normal on a seasonal basis. The numbers in recent weeks have been a little larger than what we forecast based on the Hogs and Pigs report for this time.
We would like to see one last push higher in futures to apply sales. Current summer futures are over our $78 expiration objective.