Lean Hog Spreads and Curve Instability

Lean hog spreads don’t drift. They snap.

The hog curve is fragile because it’s built on future supply assumptions that can change instantly while the physical system stays locked. That disconnect starts with hog supply cycles and biological lag, and it shows up in spreads before outright price ever reacts.

The curve prices timing, not comfort

Outright futures reflect where price clears today. Spreads reflect where pressure is building.

Each delivery month represents a different point in the pipeline, which is why futures can diverge sharply from cash when slaughter congestion dominates nearby supply. That relationship is explained in cash market vs futures divergence in hogs.

Why spreads move first

When expectations shift, traders don’t reprice the whole curve evenly. Deferred months absorb uncertainty first, front months stay pinned to current flow, and this gets jumpier around futures rollover when liquidity shifts and orderflow thins.

Instability comes from thin balance

Lean hogs operate with very little slack.

Small changes in export demand, feed costs, or disease probability can flip one part of the curve while leaving the rest untouched. That same structural pressure explains why lean hogs react violently to small data changes.

• near months constrained by current slaughter flow
• back months repricing future scarcity or excess
• spreads adjusting before outright price is forced to

Seasonality bends the curve

Seasonal weight gain and demand timing don’t hit every contract equally.

That’s why the curve distorts around inflection points tied to seasonal patterns unique to lean hogs. Traders expecting smooth rolls get caught when one month disconnects.

In lean hogs, outright price tells you where the market is. The curve tells you where the stress is forming.