The decline in both cash and futures prices continued last week. The December lean hogs futures contract has moved steadily lower since mid-September and has fallen by more than $13 over that period. The main factor pressuring prices is supply. It is not a surprise that hog prices have declined.

For the last several weeks, hog supplies have been huge. Over the past month, hog slaughter has been above year-earlier levels by more than 6 percent. Hog weights are also higher. The surprise is that wholesale pork prices have held up as well as they have.

Cash hog prices have dropped below $40 per hundredweight for the first time since April, 2006. It seems likely that hog prices below $40 are below break-even for most hog producers. With hog supplies staying high through the end of the year, it is likely prices will remain under pressure.

Source: Doane’s Agricultural Report (www.doane.com)