Lean Hog Futures Slump to Close Out Week, Traders Eye March for Rebound
Chicago lean hog futures settled lower across the board on Friday, capping off a week of steady pressure. Nearby contracts slipped 30 to 45 cents, with the key February contract down $1.10 for the week. The decline came alongside a drop in the USDA's national base hog price, reported at $83.57 Friday afternoon—down 81 cents from Thursday.
Despite the bearish price action, market structure showed underlying support. Daily open interest jumped by 2,647 contracts, indicating new money entering the market. More notably, the latest CFTC Commitments of Traders report revealed managed money funds aggressively increased their net-long position in lean hogs by 16,388 contracts as of last Tuesday, bringing the total to 113,806 contracts.
"The fund buying is a telling divergence," said Michael Riggs, a livestock analyst with Heartland Commodities. "It signals that sophisticated money sees current prices as a value opportunity, possibly anticipating tighter supplies ahead or stronger seasonal demand as we move past winter."
Supporting that view, the CME Lean Hog Index, a benchmark for cash prices, continued its climb, adding another 50 cents to reach $85.72 as of January 28. The pork cutout value, an indicator of wholesale demand, also firmed, rising 79 cents to $94.22 per hundredweight in Friday's report, though loin and rib primal cuts were weaker.
Slaughter data provided a mixed picture. USDA estimated last week's federally inspected hog slaughter at 2.522 million head. While that was 54,000 head above the prior week, it remained 37,861 head below levels from the same week a year ago, hinting at a somewhat tighter supply pipeline.
Friday's Closing Prices:
- Feb 2026 Hogs: $87.250, down $0.450
- Apr 2026 Hogs: $95.150, down $0.300
- May 2026 Hogs: $98.925, down $0.375
Trader Reactions:
Sarah Chen, Portfolio Manager, AgGrowth Fund: "The fundamentals aren't as weak as the futures tape suggests. The rising lean hog index and strong fund interest are bullish anchors. We view this dip as a consolidation before a spring rally driven by improved demand and manageable supply."
Jake "Buck" Wilson, Independent Hog Producer from Iowa: "It's the same old story. The futures market gets spooked by a penny drop in cash, while our costs—feed, fuel, financing—keep climbing. This disconnect is killing producer margins. The big money might be 'long,' but it's us in the barns who feel the real pain."
Dr. Aris Mendoza, Agricultural Economist at Midwest University: "The data presents a classic tension between short-term cash flow and longer-term positioning. The slaughter numbers year-over-year are supportive, and the cutout strength, excluding loins, is encouraging. March typically brings a seasonal inflection point, which the managed money seems to be front-running."
Disclaimer: On the date of publication, the original author did not have positions in any securities mentioned. This article is for informational purposes only. Analysis and commentary from fictional industry figures have been added for context.