Managing the market we have, not the one we hoped for

There were plenty of reasons to feel constructive about the pork market last week. Slaughter remains anything but burdensome, with recent federally inspected hog numbers around the low 2.28 million-head area. Our team is still expecting August and September, in aggregate, to remain below year-ago levels even if individual weeks jump higher. The pork cutout has continued to hold near levels that, on a longer-term chart, are not weak by any historical standard. Yet the futures board still gave us another down week.

That disconnect is what makes this market so frustrating. Extrapolating some terminology from Dr. Lee Schulz’s column last week, the “what is” is not terrible: fewer hogs than normal seasonal expectations and respectable pork values relative to historical seasonal values. The problem is the market had been trading a more optimistic “what if”—what if the tighter kill produced a bigger price response, what if pork demand accelerated, what if tight beef supplies and protein enthusiasm pulled pork higher with it? When those bigger expectations were not met again, even a fundamentally decent week felt disappointing.