Highlights

  • December lean hogs settled at 56.025 cents per pound on Wednesday, up 0.225 cents, after a contract low of 53.175.
  • The pork cutout fell $1.29 to $69.52 per hundredweight after touching its lowest level since December 2020.
  • US pork exports in September fell 7% by Volume and 14% by value from a year earlier.
  • Smithfield's Fresh Pork segment posted an $89 million operating loss while Packaged Meats profit rose to $230 million.

Hog futures have lost about a third of their value since late July, and a modest bounce does little to change that. December lean hogs settled at 56.025 cents a pound on Wednesday 11 November, up 0.225 cents, after touching a life-of-contract low of 53.175 on Friday 6 November. The main explanation on offer is weak Demand for pork at home and abroad. For Smithfield Foods (NASDAQ:SFD) and Hormel (NYSE:HRL), cheaper hogs mean opposite things.

A Demand Problem More Than a Supply Shock

The pork cutout, USDA's measure of the wholesale value of a pig carcass, fell $1.29 on 10 November to $69.52 per hundredweight after touching its lowest since December 2020 the previous week.

Exports have disappointed. September pork exports fell 7% by volume and 14% by value from a year earlier. Reported explanations include an oversupply of hogs in China, lower Mexican purchases, high petrol prices squeezing US consumers and some shoppers' perception that pork can be dry when cooked. Their relative weight cannot be measured from the available data; what the data do show is that wholesale values and cash prices have both fallen.

Heavier Hogs Add to Supply

Supply is not shrinking fast enough to offset soft demand. Average hog weights rose to 293.5 pounds in the week to 31 October from 291.6 pounds a year earlier, and the latest average is 294.3 pounds. Heavier carcasses mean more pork per animal even if slaughter numbers are flat. Year-to-date slaughter was about 106.2 million head as of 3 November, down 0.9%, and Wednesday's kill was estimated at 462,000 head, down more than 25,000 from a year earlier.

USDA's November estimates raised the fourth-quarter 2026 pork production forecast, cut pork export forecasts for 2026 and 2027, and lowered hog price forecasts for the rest of 2026 and the first half of 2027.

Feed, the Dollar and the Global Picture

For producers, the squeeze comes from Revenue rather than feed. December corn closed at $4.48 per bushel and December soybean meal at $329.70 per short ton, both moderate by recent standards. If feed costs kept rising while hogs stayed near contract lows, margins would narrow further, which could eventually slow expansion.

The currency is another headwind: a dollar index at a 1.5-year high makes US pork pricier for foreign buyers, including Mexico, though its effect on a given week's sales is hard to isolate.

Who Gains and Who Loses

Integrated producers lose on live animals, while processors and branded-food companies may benefit from cheaper raw materials if they can hold selling prices.

Smithfield, the largest US pork company, shows both sides. In its third-quarter results on 27 October, Fresh Pork posted an $89 million operating loss and Hog Production profit fell to $34 million from $89 million, while Packaged Meats operating profit rose to $230 million. It guided Hog Production results between a $25 million loss and a $25 million profit for fiscal 2026.

Hormel is primarily a branded packaged-foods company and buys pork as a raw material. Cheaper hogs could ease its input costs, though the effect depends on contracts, product mix and retail pricing. It reports fourth-quarter results on 3 December.

JBS said its US pork unit's adjusted EBITDA fell 83% to $37 million in the third quarter, a 2.0% margin, citing softer domestic demand and increased global supply. Tyson also runs a pork segment alongside beef and chicken.

What Could Change the Outlook

Prices could recover if the holiday ham season lifts demand, exports improve, or lower prices prompt producers to slow production; traders were already looking towards holiday demand as hogs recovered $3.33 from Friday's lows. Continued heavy weights, further cutout weakness or new trade barriers could extend the decline.

Watch the daily pork cutout and cash hog reports, the CME Lean Hog Index, weekly export sales and Friday's CFTC data. Tyson reports on 16 November and USDA's next supply and demand estimates and quarterly Hogs and Pigs report will update supply expectations.