Pork is one of the most important sources of meat in most part of the world. Through the Lean Hogs futures (LE), a trader can express their view on the hogs market.
That said, to make good trading decisions, it is important to understand the fundamentals behind the hogs market.
In this post, we will take an in-depth dive into the seasonality of the lean hogs market!
Lean Hogs monthly seasonality from 2015 – 2022:
Historically speaking, the lean hogs market tends to display high prices in early and mid-summer (June - July), and begin to decline at the peak of summer (August) through the end of the year:
Let’s look into why the Lean Hogs market behaves this way:
#1 Increased demand
Late Spring to early and mid-Summer (June – July) tend to be the time of the year when most BBQ activities take place. As such, there tends to be an increase in the demand for meat like pork.
As we head towards the peak of the summer heat, BBQ activities begin to drop when BBQ becomes more of a chore thanks to the heat, which leads to a drop in meat demand.
#2 Production Cycle
The seasonality in the lean hogs market could also be seen in how pigs (or sows) are being bred and produced as a whole.
For instance, sows typically give birth in the spring and summer, resulting in a greater supply of hogs for slaughter during the fall and winter months.
#3 Weather
While hogs are reared indoors, hot summers can give hogs a hard time as well. Hot summers can stress hogs, which can lead to lower weights and higher mortality rates.
This can reduce the supply of hogs available for slaughter in the summer months.
As a result of these factors, lean hogs futures prices typically peak in the summer months and bottom in the winter months. However, it is important to note that this seasonal pattern can vary depending on a number of factors, such as the overall health of the economy, weather conditions, and disease outbreaks.
Let’s break this down further by seasons of the year:
Spring: The prices of lean hogs futures tend to rise during the spring season. This is because sows give birth, leading to a tightening supply of hogs available for slaughter.
Summer: The peak of lean hogs futures prices is typically observed in the summer. This is due to the high demand for pork and the relatively low supply of hogs available for slaughter.
Winter: The winter season usually sees the lowest prices for lean hogs futures. This is because the supply of hogs available for slaughter is high, while the demand for pork is relatively low.
Verdict: Understanding the seasonality in Lean Hogs market can help traders make better trading decisions
Understanding the seasonality of the lean hogs market can give traders like ourselves a big-picture view of the industry, hence making it possible to make better trading decisions.
Regardless, It is important to note that the above is a general overview of the seasonality in lean hogs futures. The timing and magnitude of seasonal price movements can vary from year to year.
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Disclaimers
Any of the information above is produced with my own best effort and research.
This post is produced purely for sharing purposes and should not be taken as a buy/sell recommendation. Past return is not indicative of future performance. Please seek advice from a licensed financial planner before making any financial decisions.
Leverage is a financial tool that comes with its advantages and risks. Please learn and understand both the upsides and downsides of leverage before using it for trading.
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