Writing a hog market column in the middle of June is always interesting. By now, we have enough of the year behind us to know what kind of hand we have been dealt. But there is still plenty of summer left for the deck to get reshuffled.
Summer heat can still impact harvest weights and ongoing health challenges leading to increased death loss. Exports can always surprise us. Consumers can either keep showing up at the meat case or start making different choices. And of course, futures markets can remind us very quickly that confidence and certainty are not the same thing. We seem to be operating in a market that feels steady in some places and uncomfortable in others.
Historically, the summer lean hog rally usually started to show itself before we get this deep into June. In a more typical year, the board begins anticipating tighter summer supplies sometime around late April or May, then builds momentum into Memorial Day and the early-June grilling window. Last year, for example, summer hog futures were already at the upper end of their 10-year range by mid-May, with June above $100 per hundredweight and July above $104 as we moved into grilling season.
In 2023, the rally came later but was still dramatic, with July and August ultimately settling above $102 per hundredweight after June settled in the upper $80s. That is what makes this year feel so late. We are already two weeks into June, still waiting for the supply hole and cutout strength to confirm the story, and the futures market has spent more time liquidating length than rewarding the seasonal pattern.
Managed money has played an outsized role in this move. Earlier this spring, speculative length helped push the market toward contract highs. Since then, that long position has been aggressively liquidated, while a large managed money short position has been built at the same time. That is a lot of selling for a relatively thin market to absorb. Managed money longs pared down from near 150,000 contracts to roughly the 40,000-to-50,000 contract area, while managed-money shorts have pushed toward the mid-70,000 contract area. Whether those are the same funds flipping direction or different funds entering from the short side, the effect is the same: the futures market had to absorb a wave of speculative selling.
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