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Pork cut-out values are up 3.8% in the past week and packer profit margins are very strong but traders remain concerned that demand will dry up in the next few weeks and this has sparked an aggressive long liquidation trend this week. February hogs closed sharply lower on the session yesterday as bearish news on product prices (hams and loins both down sharply) along with weakness in the cash market and bearish outside market forces helped to pressure. Traders expected cash markets to be steady so news that cash was $1.00 lower helped to pressure the market. Traders see weakening packer demand for live inventory into next week due to holiday slaughter schedule and while weights show producers current with marketings, traders remained concerned that hogs will back up in the country. Cash is called $.50-$1.00 lower for this morning. The CME Lean Hog Index as of December 15th came in at 65.18, up 61 cents from the previous session and up from 61.62 the week before. The estimated hog slaughter came in at 431,000 head yesterday. This brings the total for the week so far to 1.717 million head, up from 1.539 million last week at this time but down from 1.741 million a year ago. Pork cut out values, released after the close yesterday, came in at $70.72, up 78 cents from Wednesday and up from $68.12 the previous week. Hams were down slightly but loin prices were up $4.32 to $90.78 from $82.57 last week at this time. Actual US pork production for the week ending December 5th came in at 465.3 million pounds, up from 414.2 the previous week and up 3.57% from a year ago. Pork production for the 1st quarter of 2010 is expected to come in 2.2% below last year. In addition, the shift to lower production into the 1st quarter from the 4th quarter is higher than normal which suggests a stronger than normal cash market up seasonal into mid-February.
TODAY’S GUIDANCE: The weak technical action this week is a concern for the bulls and a dip in open interest only adds to the potential for a long liquidation sell-off into the holidays. Given the relatively firm fundamentals and the lack of a significant premium of February to the cash, the set-back could be shallow. February hog support emerges at the primary uptrend channel support line at 65.07 today and again at the 50% correction mark of the November rally at 64.50 with 66.45 and 67.50 resistance.
Hog Market Commentary – 2009.12.18
by Terry Roggensack on December 18, 2009
Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
Pork cut-out values are up 3.8% in the past week and packer profit margins are very strong but traders remain concerned that demand will dry up in the next few weeks and this has sparked an aggressive long liquidation trend this week. February hogs closed sharply lower on the session yesterday as bearish news on product prices (hams and loins both down sharply) along with weakness in the cash market and bearish outside market forces helped to pressure. Traders expected cash markets to be steady so news that cash was $1.00 lower helped to pressure the market. Traders see weakening packer demand for live inventory into next week due to holiday slaughter schedule and while weights show producers current with marketings, traders remained concerned that hogs will back up in the country. Cash is called $.50-$1.00 lower for this morning. The CME Lean Hog Index as of December 15th came in at 65.18, up 61 cents from the previous session and up from 61.62 the week before. The estimated hog slaughter came in at 431,000 head yesterday. This brings the total for the week so far to 1.717 million head, up from 1.539 million last week at this time but down from 1.741 million a year ago. Pork cut out values, released after the close yesterday, came in at $70.72, up 78 cents from Wednesday and up from $68.12 the previous week. Hams were down slightly but loin prices were up $4.32 to $90.78 from $82.57 last week at this time. Actual US pork production for the week ending December 5th came in at 465.3 million pounds, up from 414.2 the previous week and up 3.57% from a year ago. Pork production for the 1st quarter of 2010 is expected to come in 2.2% below last year. In addition, the shift to lower production into the 1st quarter from the 4th quarter is higher than normal which suggests a stronger than normal cash market up seasonal into mid-February.
TODAY’S GUIDANCE: The weak technical action this week is a concern for the bulls and a dip in open interest only adds to the potential for a long liquidation sell-off into the holidays. Given the relatively firm fundamentals and the lack of a significant premium of February to the cash, the set-back could be shallow. February hog support emerges at the primary uptrend channel support line at 65.07 today and again at the 50% correction mark of the November rally at 64.50 with 66.45 and 67.50 resistance.
Tags: Hogs, Livestock
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