Pork Supply: Spring & Summer Premiums

Pork Supply: Spring & Summer Premiums

On this page:

• Full Report
• Price Chart
• Forecasts
• Downloads

Steiner and Company produces the Profit Maximizer report on behalf of National Pork Board based on information we believe is accurate and reliable. However neither NPB nor Steiner and Company warrants or guarantees the accuracy of or accepts any liability for the data, opinions or recommendations expressed.

Full Report

Lean hog futures have seen a sharp increase since the start of the year. Considering that the December Hogs and Pigs report showed more hog supplies in the pipeline, the rally may have caught many by surprise. First, we outline what we think is driving the rally and then discuss the implications for product prices this coming spring and summer.

According to USDA, the pig crop for Sep-Nov was 0.4% higher than the previous year. This marked a notable shift from earlier expectations for a 2-2.5% decline. In other words, hog slaughter in Mar-May should run about half a percent above year-ago levels. Add to this a 0.5-1% increase in carcass weights and pork supply in the spring is now expected to be higher than the previous year. As for the summer, the survey again suggests the potential for a 2.5-3% increase in slaughter, with any carcass weight increases adding to that as well.

Despite the prospect of more supply, futures are currently pricing hogs above last year's levels, particularly for the spring.

In our view, there are a couple of reasons for this. First, the pork cutout to start the year has been above year-ago levels even as more supply has been available. The pork cutout value between January 8 and January 23 averaged $93.2/cwt, 2.7% higher than last year, while pork production during the three-week period was 2.6% higher than a year ago. Prices were higher across the board, with loin values up 6.8%, picnics up 7%, ribs up 22%, and hams up 5%. Indeed, the cutout would have been even higher if not for belly prices, which so far have been 7% lower than last year.

Given the current level of demand and some expectation that belly prices should seasonally move higher into the spring, futures have steadily revised higher their outlook for hog, and thus pork, prices this spring. Speculative funds have added to their net long position, now approaching 100,000 contracts. This represents a significant shift compared to where they were in December (see chart).

The second factor driving futures, in our view, is speculation that disease, be it PEDv or PRRS, will once again curtail hog supplies this spring and summer. The survey reflects producer expectations based on their breeding herd and productivity, but disease losses can quickly reverse the outlook. That was part of the story last year, when hog slaughter during late spring and summer diverged widely from survey expectations, and it is once again part of current speculation. It is important to note the speculative part of this, as there is no hard data to quantify the size of potential losses. Feeder pig prices have increased sharply, in part due to lower feed costs, but also suggesting tighter feeder pig supplies.

For processors and retailers, the market is signaling that demand has begun to outpace available supply.

Pork prices at retail remain especially competitive versus beef, and in some cases chicken as well, helping drive sales. For hog producers, however, there are some cautionary flags given the volatility experienced last year. Futures are currently offering producers the opportunity to lock in a profit, and current hedging opportunities become even more attractive when factoring in government programs that subsidize part of the premium.

Bottom line: for processors, it is important to understand the factors driving current pricing and to help educate customers, both retailers and foodservice operators. Even as hog futures have rallied, pork overall remains competitive relative to other proteins. For producers, 2026 promises to be another profitable year, especially for those able to manage risk.

Price Chart

Forecasts