Changes to Hog Formulas: Swapping Negotiated Hogs With Pork Cutout Values

ABSTRACT Since 2019, negotiated and formula hog values have increasingly diverged. Using rolling regression models, we demonstrate that the divergence is likely due to a switch from using negotiated hog values to using pork prices for valuing formula hogs, limiting the previously theorized impacts of thin negotiated hog markets on producer welfare. The change in the formulas raises timely questions about the thinness of wholesale pork markets, risk sharing through public information, and transparency in formula pricing.