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The big discount of futures to the cash market may provide some support in the event of a recovery in the financial markets. A surge in US equity markets overnight, combined with a sharp slide in the US dollar, should provide some general support to commodity markets and to the meat markets to start the day. We are a bit concerned on the bull case due to rising average weights during a period when weights typically come down. Perhaps the exceptionally good weather in May for weight gains caused the higher weights, and the recent hot and humid weather will pull weights down but for now, this is a negative force. Weekly average weights from Iowa/Minnesota for the week ending May 22nd came in at 270.8 pounds, up from 270.3 the previous week and up from 268.1 pounds last year. Last year’s weights were relatively high, with the 5-year average near 267 pounds. The market managed to push higher on the session yesterday, despite weakness in the cash market and the outlook for lower cash hogs again this morning. One less slaughter day next week combined, with expectations of a small slaughter for Saturday, has helped pressure the cash market this week. The lack of pressure from the stock market and strong gains in other commodity markets helped slow the aggressive fund trader selling seen in recent days, and helped support some new buying. The discount to the cash market and ideas that cash hogs could see some stability or even higher trade next week helped to support. The CME Lean Hog Index as of May 24 came in at 84.83, down 77 cents from the previous session and down from 87.31 the week before. The estimated hog slaughter came in at 395,000 head yesterday. This brings the total for the week so far to 1.135 million head, down from 1.189 million head last week at this time but up from 865,000 head a year ago. Pork cutout values, released after the close yesterday, came in at $87.45, down 10 cents from Tuesday but up from $87.21 the previous week. Feeder Pig imports from Canada for the week ending May 15 came in at 91,265 head, up from 85,332 head the previous week and compared to a 4-week moving average of 86,947 head. Feeder pig imports for the year have reached 1.84 million head, down 8.3% from last year.
TODAY’S GUIDANCE: Cash demand is slow this week, but could pick-up next week and the stiff discount could then be a more important force. High weights are a slight negative, but hot weather this week may have already corrected this situation. Easing of the long liquidation selling sparked by equity market weakness may be all this market needs to see a significant bounce.
TODAY’S MARKET IDEAS: Buying support for July hogs comes in at 81.77 with 83.40, and 84.25 as initial resistance. A move through 83.00 would confirm the May 21st reversal low and leave 84.22 as a near-term upside objective.
Hog Market Commentary – 2010.05.27
by Terry Roggensack on May 27, 2010
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!
The big discount of futures to the cash market may provide some support in the event of a recovery in the financial markets. A surge in US equity markets overnight, combined with a sharp slide in the US dollar, should provide some general support to commodity markets and to the meat markets to start the day. We are a bit concerned on the bull case due to rising average weights during a period when weights typically come down. Perhaps the exceptionally good weather in May for weight gains caused the higher weights, and the recent hot and humid weather will pull weights down but for now, this is a negative force. Weekly average weights from Iowa/Minnesota for the week ending May 22nd came in at 270.8 pounds, up from 270.3 the previous week and up from 268.1 pounds last year. Last year’s weights were relatively high, with the 5-year average near 267 pounds. The market managed to push higher on the session yesterday, despite weakness in the cash market and the outlook for lower cash hogs again this morning. One less slaughter day next week combined, with expectations of a small slaughter for Saturday, has helped pressure the cash market this week. The lack of pressure from the stock market and strong gains in other commodity markets helped slow the aggressive fund trader selling seen in recent days, and helped support some new buying. The discount to the cash market and ideas that cash hogs could see some stability or even higher trade next week helped to support. The CME Lean Hog Index as of May 24 came in at 84.83, down 77 cents from the previous session and down from 87.31 the week before. The estimated hog slaughter came in at 395,000 head yesterday. This brings the total for the week so far to 1.135 million head, down from 1.189 million head last week at this time but up from 865,000 head a year ago. Pork cutout values, released after the close yesterday, came in at $87.45, down 10 cents from Tuesday but up from $87.21 the previous week. Feeder Pig imports from Canada for the week ending May 15 came in at 91,265 head, up from 85,332 head the previous week and compared to a 4-week moving average of 86,947 head. Feeder pig imports for the year have reached 1.84 million head, down 8.3% from last year.
TODAY’S GUIDANCE: Cash demand is slow this week, but could pick-up next week and the stiff discount could then be a more important force. High weights are a slight negative, but hot weather this week may have already corrected this situation. Easing of the long liquidation selling sparked by equity market weakness may be all this market needs to see a significant bounce.
TODAY’S MARKET IDEAS: Buying support for July hogs comes in at 81.77 with 83.40, and 84.25 as initial resistance. A move through 83.00 would confirm the May 21st reversal low and leave 84.22 as a near-term upside objective.
Tags: Hogs, Livestock
About Terry Roggensack