Looking to the Futures

Lean hog futures have been under steady pressure since early September, and the selloff picked up speed last week. December lean hogs (/HEZ26) fell $2.65 on October 27 to settle at $62.025 per hundredweight, the lowest close for a nearby contract since December 2020. The cash market has led the way lower, with USDA’s national base hog price dropping to $57.94 and the CME Lean Hog Index slipping to $70.06.

Weak wholesale pork demand is the main reason. USDA’s pork carcass cutout value fell to $73.09, also the lowest since December 2020, and is down nearly 25% from its summer peak, with bellies and hams leading the decline. Consumers have not shifted to pork despite high beef prices, and larger chicken supplies are adding competition at the meat case. Pork in cold storage totaled 427.8 million pounds at the end of September, nearly 9% above a year ago. With slaughter entering its seasonal peak and most holiday ham buying already done, packers have little reason to chase hogs.

Supplies are less of a concern. USDA’s September Quarterly Hogs and Pigs report put the U.S. herd at 74.3 million head, down 2% from last year, and the breeding herd at 5.875 million, the smallest September total since 2013. However, record litter sizes and heavier slaughter weights have kept pork production slightly above last year. USDA’s October supply and demand report cut 2026 pork production by 150 million pounds to 27.6 billion, trimmed exports to 7.05 billion pounds on weaker shipments to Western Hemisphere markets and lowered its 2026 hog price forecast by about $1 to $63.79 per hundredweight. Trade remains a headwind, as U.S. pork still faces retaliatory duties in China and demand growth from Mexico, the top export market, has slowed.

The lean hog futures price curve suggests traders expect conditions to improve next year. June 2027 lean hogs settled at $85.00, more than $20 above December, reflecting tighter hog supplies expected through mid-2027 and stronger summer grilling demand. Fund positioning could also matter, as managed money held a large net short position of about 41,100 contracts as of October 20, which could fuel a short-covering rally if cash prices stabilize. Seasonal patterns may limit any near-term rebound, though, as the pork cutout has often posted its fourth-quarter low in early December.

In the near term, traders will be watching daily cash hog and cutout values for signs of a bottom, along with weekly export sales and slaughter weights. USDA’s next supply and demand report on November 10 and the December 23 Quarterly Hogs and Pigs report will offer fresh reads on production and prices heading into 2027.

This morning, U.S. stock index futures were mixed in the early hours with the Russell 2000® (+0.03%) and Nasdaq-100® (+0.32%) higher, but the S&P 500® (–0.05%) and the Dow Jones Industrial Average® (–0.51%) lower. 

In Asia, major indexes closed mixed with the Hang Seng (+0.57%) higher, but the Shanghai (–0.82%) posting losses. The Nikkei is closed for a market holiday.

European trading saw the CAC (–0.33%), the DAX (–0.81%), and the FTSE (–0.57%) lower by midday. 

Soybean futures (/ZSF27) closed Monday’s session lower (–1.42%), extending a recent pullback as traders weighed export demand against prospects for another large Brazilian crop. Favorable early-season rainfall has supported Brazilian planting, while China remains on track to meet its soybean purchase commitment despite slower buying of other American agricultural products. Across the grain markets, corn ended October down roughly 10% and wheat posted its ninth consecutive weekly loss, with export competition weighing on prices even as weather risks in South America and the Black Sea remained in focus.

Mexican peso futures (/6MZ26) closed higher to start the week (+1.28%), as the currency rebounded against the dollar following recent weakness. The peso traded near 18.6 per dollar Monday, although it remained roughly 3% weaker over the past month amid pressure from a narrower interest-rate advantage over the United States. Banxico’s benchmark rate stands at 6.50%, while annual headline inflation reached 3.62% in the first half of October, keeping the outlook for Mexican monetary policy in focus.

Crude oil futures (/CLZ26) closed sharply lower Monday (–7.36%), as renewed diplomatic efforts to end the U.S.-Iran conflict eased concerns about further disruptions to Middle East oil supplies. OPEC+ kept December production targets unchanged on Sunday, while attacks on tankers transiting the Strait of Hormuz continued to complicate energy shipments and raise shipping costs. Gasoline and heating oil prices also fell Monday, underscoring the broader energy market’s sensitivity to prospects for improved supply flows, although an agreement to end the conflict remained uncertain.

Major economic reports, trading events, and news items that could potentially impact specific futures markets:

JOLTs Job Openings and Quits for September (interest rates)

S&P Manufacturing Index for October (interest rates)

RCM/TIPP Economic Optimism Index for November (interest rates)

Factory orders for September (interest rates)

Futures Last Trading Day: October Milk

6-week T-bills 

New futures products are available to trade with a futures-approved account on all thinkorswim platforms: 

• Ripple (/XRP)
• Micro Ripple (/MXP)
• 100 OZ Silver (/SIC)
• 1 OZ Gold (/1OZ)
• Solana (/SOL)
• Micro Solana (/MSL)

Visit the Schwab.com Futures Markets page to explore the wide variety of futures contracts available for trading through Charles Schwab Futures and Forex LLC.