Is the hog market tighter than the data suggest? Ever.Ag’s Dave Delaney joined AgriTalk to break down why disease outbreaks are curbing supply despite record-setting productivity in healthy herds. From “red hot” feeder pig prices to a predicted summer rally, Delaney explains why the October board may be significantly undervalued and why he is looking as far ahead as 2027 to lock in “huge” profit margins.
Slaughter Trends and Supply
Although USDA’s March Hogs and Pigs report expected a 2% increase in supply in 2026, year-to-date slaughter is only up 0.5% (when adjusted for slaughter days). However, Delaney expects higher slaughter numbers over the next few weeks.
“I think the next three to four weeks, we’re likely going to slaughter more than we did a year ago,” he says. “Part of that is some lagging finish hogs that were health challenged, and the growing weather here the last month has been extremely good. I think we’re pulling ahead some.”
The “Health Narrative” Tightens Supply
Porcine reproductive and respiratory syndrome (PRRS) and porcine epidemic diarrhea (PED) continue to cause significant litter losses and death loss in some systems.
“With PRRS, we don’t know what to expect. But with PED, you get that in the sow farm, and that’s a period of loss of litters and loss of pigs,” Delaney says. “When you combine those two, and some of the variation of strains and the strength of these strains, it’s gotten pretty bad.”
The supply tightness is reflected in “red-hot” prices, Flory points out. With 40-lb. feeder pigs hitting $125, and wean pigs trading roughly $31.50 higher than this time last year, Delaney agrees the health situation has tightened things up.
Productivity vs. Disease
The market is currently sending conflicting signals: high death loss in some barns versus a USDA report showing record pigs saved per litter. Delaney says both are true.
Delaney says there is definitely a “balancing act” occurring between record-high pigs saved per litter in healthy systems and the significant losses in health-challenged systems.
“The genetics we have in place continue to get better, and we see our production numbers continue to climb forward,” he explains. “Those systems not affected by health issues are pushing out numbers of pigs the last three weeks. It’s a balancing act. Does the bad overtake the good or the good overtake the bad? That’s something we face within this industry every day.”
Summer Rally Ahead?
Delaney is optimistic about summer prices, predicting a rally that could last through September. He specifically points to the October lean hog futures as being “way undervalued.”
“I think we’re going to have the ability to put in some solid hedges with triple digits in October, and that probably comes on the heels of when we get extremely short July to August,” Delaney says.
He says the current market structure where June settles below July and August trades at a premium to July is a pattern he expects to repeat.
What Delaney Watches in the Hog Market
Hog weights have been a little “erratic,” but he expects them to show the typical seasonal decline as summer heat approaches.
“The growing conditions and healthy herds have helped us,” Delaney says. “Growers open barns up and say, ‘Oh my goodness, these things average 308? I didn’t expect that.’”
He is keeping a close eye on kill levels now, watching the aggressiveness or lack of aggressiveness of packers.
“We’ve got a few packers that are out searching here every day,” Delaney says. “When multiple packers call on a Monday wanting pigs for Friday, rather than a week ahead, that’s going to be our first sign this thing’s tightening up.”
And on the backside of that, he’s paying attention to the cutout and the demand factor.
“Right now our demand is good, but it just feels steady right now,” he says.
Risk Management Strategy
Will the grilling season help? Flory says if American consumers get even more beef hungry than they already are, the beef market is going to be “on fire.”
Delaney remains cautious about locking in prices too early. He is waiting for a seasonal rise in fundamentals to re-establish hedges at higher levels.
“We had the opportunity once to put in some summer hedges at pretty good levels that were same or above year ago,” he says. “We’re looking at pulling hedges off and reestablishing it at higher prices. My thought process here short term is flat and steadyish, maybe a seasonal little incremental rise in the fundamentals.”
Delaney is looking as far out as the summer of 2027, noting that the projected margins available for producers are “huge.”
