Written Commentary
MORNING LIVESTOCK FUTURES OUTLOOK
CATTLE COMPLEX
Live cattle volume increased Wednesday with cattle higher. A large part of trading was buying cattle and selling hogs. As i have been reporting throughout January, there has not been a good reason why cattle haven’t gained on hogs. The December and January cattle on feed reports showed fewer cattle and the quarterly hogs and pigs report estimated more hogs.
LEAN HOG COMPLEX
Because futures hedging has been taken over by various packer pricing programs, such as formula and “other purchase arrangements” and packers owning hogs, the futures market is dominated by speculators and they are mostly using spreads. During the non-spot months they completely dominate the hog market.
Currently, the February 2026/April 2026 lean hog spread has April too far over February. A year ago at this time the spread was also wide, but when February settled, the spread had narrowed. 2026 is expected to have more hogs. Global hog numbers are expected to have more. On the positive side, pork consumption is expected to get better, but with the increase in hog numbers, consumption will need a big increase.
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