This week’s hog kill could reach 2.26 million head, which would top the year-ago figure by about 7.1 percent. That disparity raises questions about the accuracy of the USDA’s December Hogs & Pigs report.

The USDA data implied slaughter rates would run about 2 percent below year-ago rates through December, match early 2014 results into February, then average about 3 percent over comparable 2014 figures from early March through June. Instead, weekly kills were relatively low in December, but have surged well above expectations since January 1. This suggests the USDA underestimated the supply of mid-weight hogs last December. Producers may be marketing hogs very aggressively due to the persistent price decline, but the fact that hog weights remain about 4.5 pounds/head over last year suggests supply is quite large.

The cash and wholesale markets appear to have stabilized this week, which implies the markets are finally finding their footing. We still expect a torrid demand response from both domestic consumers and export customers when spring arrives, but we probably shouldn’t expect a major advance in the short run.