+Info   Hogs are generally bred twice a year in a continuous cycle designed to provide a steady flow of production. The gestation period for hogs is 3-1/2 months and the average litter size is 9 pigs. The pigs are weaned at 3-4 weeks of age. The pigs are then fed to maximize weight gain. The feed consists primarily of grains such as corn, barley, milo, oats, and wheat. Protein is added from oilseed meals. Hogs typically gain 3.1 pounds per pound of feed. The time from birth to slaughter is typically 6 months. Hogs are ready for slaughter at about 254 pounds, producing a dressed carcass weight of around 190 pounds and an average 88.6 pounds of lean meat. The lean meat consists of 21% ham, 20% loin, 14% belly, 3% spareribs, 7% Boston butt roast and blade steaks, and 10% picnic, with the remaining 25% going into jowl, lean trim, fat, miscellaneous cuts, and trimmings. Futures on lean hogs are traded at the CME Group. The futures contract is settled in cash based on the CME Lean Hog Index price, meaning that no physical delivery of hogs occurs. The CME Lean Hog Index is based on the 2-day average net price of slaughtered hogs at the average lean percentage level.

Prices - CME lean hog futures prices (Barchart.com electronic symbol HE) traded sideways to higher in the first half of 2017 as slack pork belly supplies underpinned hog prices. The monthly Cold Storage report showed pork belly supplies in January 2017 plunged by -77% yr/yr to 14.01 million lbs, the lowest on record since data began in 1957, due to strong domestic bacon demand. Hog prices surged into Q3 and posted a 3-year high of 92.82 cents per pound in July as pork belly prices rallied to a record high of $2.75 a pound. The rally in hog prices encouraged pig ranchers to increase their herds. Indeed, hog prices plummeted to a 1-year low in Sep of 54.925 cents per pound after the Q3 USDA Hog & Pigs report showed the U.S. pig herd as of September 1 rose +2.5% yr/yr to 73.5 million hogs, the highest inventory for the month of September since data began in 1964. Hog prices stabilized and moved higher into year-end as a plunge in the dollar to a 3-year low boosted foreign demand for U.S. pork as U.S. 2017 pork exports rose +7.5% yr/yr to 5.632 billion lbs. The USDA also projected that U.S. 2018 pork exports would climb +5.6% yr/yr to a record 5.9 billion lbs. The upside in hog prices was limited after the Q4 Hogs & Pigs report showed hogs marketed for slaughter on December 1 rose +2.5% yr/yr to 67.051 million, the highest for the December 1 period since the data began in 1964. Hog futures prices ended 2017 up +8.5% at 71.775 cents per pound.

Supply - The number of hogs on world farms as of January 1, 2018, fell by -1.8% to 755.242 million head. The number of hogs in the U.S. as of January 1, 2018, rose by +08% to 72.125 million head. The countries with the largest number of hogs as of January 1, 2018, were China with 57.6%, the European Union with 19.5%, the U.S. with 9.5%, and Brazil with 5.2%.

Demand - The federally-inspected hog slaughter in the U.S. in 2017 rose by +2.7% to 120.516 million head, a new record high. U.S. hog marketings in 2016 rose by +3.2% to 165.127 million head.

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