Hogs Rally
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December Lean Hogs opened higher and made the session low at 70.05. Price reversed course and raced to the high at 71.20. It consolidated the rest of the session and settled near the high at 70.95. The cash market stabilized at least for one day and traders continued their short-covering from Friday as record short positions were held by funds. With record short positions in the hog market traders could be feeling the pressure of who’s left to sell. This has put futures back in the upper end of their trading range it has been in since December took over as the lead contract. December put in the high for the trading range on September 22 at 71.625 and the low on October 1 at 67.95. China has been back buying pork from the US and traders could be imagining better demand for pork from China going forward. The US and China have come to an agreement that was set up during the recent trip from the Chinese leader that has put pork back in the picture. China imports pork variety meats from the US that brings greater value to those products than we get from the domestic market. This could put producers and processors in a better situation if the Chinese continue their recent pursuit of US pork. The US and China have agreed to reciprocal tariff reductions on a multitude of products with agriculture a big part of the tariff reduction. The US will be receiving most favored tariff rates on its pork and will be exempt from country specific tariffs. This should be a boon to US producers if the Chinese follow through with continued purchases of our pork. The US and China have a trade truce that continues through January 10,2027. Ther is some talk that China is facing another outbreak of ASF that has not been confirmed by the Chinese. If true, they could be more likely to buy US pork. We’ll see!... The open was above the key level at 69.90 and the high was just below resistance at 71.325. A failure from settlement could see price re-test support at 69.90. Support then comes in at 68.75. If price can hold settlement, it could test resistance at 71.325 and then 71.825. Resistance then comes in at 72.80.
The Pork Cutout Index decreased and is at 86.05 as of 10/02/2026.
The Lean Hog Index decreased and is at 80.20 as of 10/01/2026.
Estimated Slaughter for Monday is 493,000, which is above last week’s 484,000 and last year’s 491,184.
Trade Idea:
Buy the February 2027 Lean Hog 74 call
Sell the February 2027 Lean Hog 80 vs 74 put spread.
Cost to Entry - $1,250 credit plus commissions and fees.
Margin $1,075 per spread.
Maximum risk at option expiration : $1,150 plus trade costs and fees.
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Ben DiCostanzo
Senior Livestock Analyst
Walsh Trading, Inc.
Direct: 312.957.4163
888.391.7894
Fax: 312.256.0109
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