When Pigs Don’t Fly: The Hidden Forces Sinking Lean Hog Futures
It’s autumn, but the fall in Lean Hog Futures has been anything but seasonal. Over the last three months, the benchmark contract (CME: HE, 1st expiry) has tumbled 13.7%, leaving traders and producers to wonder: when did the bacon lose its sizzle?
The Inventory That Wouldn’t Leave
Beneath the surface, the U.S. hog market is grappling with a stubborn paradox: fewer farrowings, but not fewer hogs. As of September 1, 2025, inventory clocked in at 74.5 million head, down only 1% from last year—still hovering above the comfort zone for price bulls. The market hog herd, just shy of 68.5 million, continues to oversupply processors, even as pig crops shrink and breeding herds thin (-2% YoY for breeding sows).
Why hasn’t supply tightened faster? The culprit is record productivity. Sows are saving 11.65-11.92 pigs per litter—an all-time high. More piglets per sow means the pipeline remains swollen, even as farrowing intentions edge lower. The result: a market that refuses to clear, keeping farm-gate prices soft and futures drifting lower.
Feed Costs: The Tailwind That Ran Out of Air
For much of 2024, cheap feed was a gift to hog producers. Corn settled near $4.20/bushel, and soybean meal trended down, fattening margins and encouraging production. But as we crossed into late 2025, the feed-cost bonanza faded. No further declines are on the horizon, and with input prices stabilizing, any edge for producers has dulled. The cost floor is now set, but the ceiling for hog prices has not returned.
Export Dreams, Dollar Nightmares
If you think domestic bacon cravings can save the day, think again. U.S. per-capita pork consumption is barely budging—50.9 lb projected for 2025, up just 0.4 lb from last year. Instead, hope has ridden on exports. Here, the story is bittersweet: pork exports are up 6% YoY in H1 2025, led by a voracious Mexico (now topping $2.35 billion in 2023 purchases, with 2025 value up another 11%).
But every boom has its bust. The U.S. dollar is flexing its muscles, up sharply against peers as the Fed keeps rates high. For foreign buyers—especially in China and Canada—U.S. pork is getting expensive. China’s tariffs, still a punishing 57% on most U.S. pork cuts, further choke demand. Even as June exports to China rebounded 17.4% month-on-month, overall volumes are down 2% year-on-year, and value is slipping. The export engine is sputtering just as it was supposed to kick in.
Regulation: The Silent Slaughterhouse
As if economic gravity weren’t enough, regulatory headwinds are blowing in from the coasts. California and Massachusetts have banned sales of pork from gestation-stall systems, effective now for about 15% of U.S. pork consumption. The industry is scrambling for compliance, but the transition comes with costs and uncertainty, not premium prices. For producers operating on thin margins, this is another weight on the scale—one that tips toward lower prices, not higher ones.
Biosecurity and the Fear Factor
While African Swine Fever (ASF) rages abroad—more than 14,000 outbreaks reported in 51 countries through mid-2025—the U.S. has so far dodged disaster. But the risk is ever-present, hanging over the market like the sword of Damocles. Every headline from Europe or Asia is a reminder: a single U.S. outbreak could send prices in either direction, depending on the shock’s epicenter. Traders hedge, but the threat is enough to keep speculative appetite in check.
Supply Chain Bottlenecks: More Pigs, Fewer Places to Go
Low profitability in 2023-24 delayed the expansion of finishing barns. Construction costs are steep—$430–$525 per space—and as a result, more pigs are crowding existing facilities, held longer before slaughter. The bottleneck means more weight per animal but not more value per head, and it constricts the market’s ability to adjust quickly to shocks. Equity is rebuilding—owner equity is up to 53% from 48% a year ago—but it remains below the healthy benchmark.
Not All Is Gloom: The JBS Power Play
There are bright spots. JBS USA’s acquisition of TriOak Foods’ assets tightens their grip on Midwest supply, giving one major processor more leverage to control pricing and supply. Their Q3 revenues jumped 13% YoY, driven by branded and ready-to-eat products. Still, for the average producer, such consolidation can mean less bargaining power and more price pressure—another subtle undertow for the broader market.
The Pig in the Room: Macro Gravity Wins
Lean Hog Futures are a creature of both biology and macroeconomics. Over the past three months, every bullish whisper—feed relief, export growth, disease risk elsewhere—has been drowned out by the cold arithmetic of inventory, the strong dollar, and regulatory burdens. In the end, it’s not that pigs can’t fly. It’s that this autumn, gravity is simply too strong.