Lean hogs were slammed in late April due to reaction to the so-called swine flu, or H1N1 virus, outbreak. Rich Nelson, director of research at Allendale, says the severe swing in hog futures due to the swine flu will slowly correct itself over time. “There will be some residual problems by June, July and August.” Nelson expects lean hogs to get back around 73¢ per lb. for the August contract.
Darin Newsom, senior analyst at DTN, expects the August contract to reach the 75-77¢ range. “[It] depends [if] the cash market starts to turn around. If it doesn’t and we start to see the normal pressure build in this market, it wouldn’t surprise me to see the hogs come back down into the low 70s, possibly upper 60s and build some support off of that.” He calls the swine flu “a very unfortunate name,” but expects prices to come back.
Jeremy Knutson, a broker with Hurley & Associates, says the dollar may be the biggest factor for hogs. “If the U.S. Dollar index gets a close below 80.20 for two consecutive weeks, then look for more upside in the August contract.”
Knutson adds, “I wouldn’t be surprised to see 95.50 retested if we can get two consecutive closes weekly below 80.20 in the dollar,” he says.