Lean Hogs COT Report for the week ending January 5, 2026

Executive summary

This report covers a two-week period, comparing positions as of January 5, 2026, with those from December 23, 2025. Speculative sentiment in Lean Hogs turned decidedly more bullish over the reporting week. Managed Money (speculators) significantly increased their net long position, driven by both the addition of new longs and the aggressive covering of shorts. This buying was met by increased hedging from Producers/Merchants, who expanded their net short position. The market saw a healthy increase in overall participation, with open interest rising by 6,566 contracts, suggesting new capital flowed into the market to establish these new positions. The growing divergence between bullish speculators and hedging commercials points to a market at a potential inflection point, though the large speculative long position could represent a risk if sentiment sours.

Positioning

• Managed Money: This speculative cohort holds a significant net long position of +76,307 contracts (90,681 longs vs. 14,374 shorts). This is a substantial increase from their net long position of +60,013 contracts two weeks prior.
• Producer/Merchant (Commercials): Commercials deepened their net short stance to -96,226 contracts (26,808 longs vs. 123,034 shorts). This is a larger net short than the -88,235 contracts held two weeks ago, indicating increased producer hedging.
• Swap Dealers: This category remains heavily net long at +62,295 contracts, a position that is largely stable compared to the +61,657 net long held two weeks prior.

Flows and week-over-week changes

The most significant activity during the week ending January 5th came from speculators: - Managed Money were aggressive net buyers, adding a net 4,130 contracts to their bullish position. This was composed of adding 2,638 new long contracts while simultaneously covering 1,492 short contracts—a clear signal of bullish conviction. - Producer/Merchant participants were net sellers, increasing their net short position by 1,465 contracts. This was accomplished by adding 392 longs but a much larger 1,857 shorts. - Swap Dealers were slight net sellers, reducing their net long by 650 contracts for the week.

Commercials vs speculators

The classic divergence between commercials and speculators is clearly on display and has widened. - Speculators (Managed Money) are betting on higher prices, extending their net long position to the highest level in the provided data. The dual action of adding longs and cutting shorts underscores this strong directional view. - Commercials (Producer/Merchant) are taking the other side of this trade, using the opportunity to increase their price hedges. Their growing net short position, which represents 41.6% of all short-side open interest, suggests they view recent price levels as favorable for selling forward production.

Open interest and participation

• Open Interest: Total open interest increased by 6,566 contracts to a total of 295,500. A rise in open interest alongside a build in the net speculative position is often seen as a confirmation of the trend, as it indicates new money is entering the market rather than a mere shuffling of existing positions.
• Concentration: The concentration on the short side has increased. The largest four traders now hold 17.4% of the net short position, up from 14.9% two weeks ago. This suggests that a few large entities, likely commercials, are responsible for a significant portion of the recent hedging activity. Long-side concentration held steady at 15.5%.

Price context

The provided price series data is empty for this reporting period. Therefore, it is not possible to correlate these positioning changes with specific market price action. The significant build in speculative longs and the corresponding increase in producer shorting would typically accompany a price rally, but this cannot be confirmed from the available data.

Risks and watchpoints

• Crowded Speculative Long: The Managed Money net long position of +76,307 contracts is substantial. While this reflects strong bullish sentiment, it also represents a "crowded" trade. Should market fundamentals or sentiment shift, a rush to liquidate these longs could lead to a sharp and rapid price correction.
• Commercial Hedging Pressure: The willingness of producers to sell heavily at these levels may act as a cap on further price appreciation. The market will need to absorb this consistent commercial selling to continue any upward trend.
• Two-Week Data Gap: This analysis compares the current week to data from two weeks prior (December 23, 2025). Any significant positioning changes during the intermediate holiday week are not visible in this report.