1 

Negotiated Hog Purchase Matrix 

USDA’s Agricultural Marketing Service

Livestock, Poultry and Grain Market News December 2020

 

Hog purchasing methodologies have evolved over time with most hogs today being priced on a carcass basis. 

Fat and muscling play an important role in carcass value determination as these factors closely correlate with 

the lean meat yield. For that reason, some packers collect various measurements such as backfat and loin eye 

depth to use in their buying programs and to make future production adjustments. In addition to backfat 

measurements at the carcass split, buying programs may also include a percent lean value determined with the 

use of an electronic instrument or carcass weight. These buying methods are then combined with a carcass 

weight differential and reported base prices to generate the Negotiated Hog Purchase Matrix. 

Similar to the pork carcass cutout, the Negotiated Hog Purchase Matrix is based on a 215-pound hog carcass 

and includes backfat measurements between 0.5-0.8 inches and loin eye depth measurements between 2.0-2.7 

inches. It has been identified that hogs falling within these backfat and loin eye depth measurements capture the 

vast majority of industry trade and ultimately current industry practices. These reported measurements are used 

in conjunction with packer base carcass prices, carcass weight differential, and premiums/discounts for lean 

values to produce a matrix price range. The values are calculated each reporting period for participating packers 

using only reported negotiated purchase data for which a total low-high range is determined and published. This 

Negotiated Hog Purchase Matrix price range represents what a producer could expect to receive for a net price 

for its hogs if it participated in the negotiated market on that day. 

Below is an example of a single day’s reported negotiated purchases as well as the resulting generated 

Negotiated Hog Purchase Matrix (see Figure 1). The final net price range for a 215-pound carcass in this 

example is $35.00 - $45.00. 

The table in Figure 2 demonstrates how this number was reached using 3 example companies. Companies 1 and 

3 do not have a percent lean buying program based on carcass measurements, while company 2 does. However, 

all companies in this example have a carcass weight differential for a 215-pound carcass. Since companies 1 

and 3 do not have percent lean adjustments, the only adjustment they do have is the carcass weight differential. 

Company 2 has a percent lean adjustment that ranges from -($1.00) to $4.00. It also has a $4.00 carcass weight 

differential. This accounts for the expected net price range of $40.00 to $45.00 for company 2. Accounting for 

all company adjustments from their respective base prices, we can see how the final range of possible net 

pricing is reached. 
2 

Negotiated Hog Purchase Matrix 

USDA’s Agricultural Marketing Service

Livestock, Poultry and Grain Market News December 2020

 

Figure 1 

Volume and Price Range For Barrows and Gilts

Purchased Swine (Including Packer Sold)

National Iowa/Minnesota Western Cornbelt Eastern Cornbelt

Negotiated (Carcass) LM_HG200 LM_HG204 LM_HG208 LM_HG207

On a National basis, compared to the previous day's weighted average (LM_HG200), 0.80 higher

Head Count 6,200

Lowest Base Price 33.00

Highest Base Price 42.00

Weighted Average Price 37.00 * * *

5 Day Rolling Average 36.00 * * * 

National Daily Direct Negotiated Hog Purchase Matrix

Representing Individual Packer Carcass Merit Buying Programs

based on Weight (215 lb Carcass), Backfat (0.5 - 0.8 inches), and Loin Depth (2.0 - 2.7 inches)

Range of possible net pricing: $35.00 - $45.00

Carcass Weight Differentials

145# -25.00 -10.00 175# -4.00 1.00 205# 1.00 4.00

155# -25.00 -6.00 185# -1.00 1.00 215# -1.00 4.00

165# -10.00 -3.00 195# 0.00 3.00 225# -1.00 2.00

Figure 2 

Company 1 Company 2 Company 3

Low Negotiated Base Price 33.00 37.00 42.00

High Negotiated Base Price 35.00 37.00 44.00

Lowest % Lean Adjustment NA -($1.00) NA

Highest % Lean Adjustment NA $4.00 NA

Carcass Weight Differential at 215 lbs. $2.00 $4.00 -($1.00)

Expected Net Price Range $35.00 - $37.00 $40.00 - $45.00 $41.00 - $43.00