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A steady tone for the cash hog market has helped to provide some support this week but the premium structure of August futures to the cash may be a limiting factor ahead of a key report for Friday. Weakness in pork overnight and demand for meat in general is a growing concern. A bearish tone for outside markets and signs of a weakening US economy were factors which helped the hog market give back part of the recent gains. Positioning ahead of Friday’s USDA Hogs and Pigs report and talk of the overbought technical condition added to the negative tone yesterday. Cash markets had a positive tilt and the cold storage report this month was supportive but this news failed to provide much support to the market and futures drifted lower. The futures premium to the cash market was also viewed as a slight negative. The CME Lean Hog Index as of June 21st came in at 80.33, up 51 cents from the previous session and up from 77.83 the week before. The estimated hog slaughter came in at 399,000 head yesterday. This brings the total for the week so far to 1.165 million head, down from 1.201 million last week at this time and down from 1.227 million a year ago. Pork cutout values, released after the close yesterday, came in at $83.80, down 48 cents from Tuesday but up from $81.34 the previous week. Hams and loins were lower and traders are somewhat concerned that the export market may be slowing due to weakening world economy. Weekly average weights for Iowa/Minnesota for the week ending June 19th came in at 270.6 pounds, down from 271 the previous week and up from 268.7 pounds last year. Feeder Pig imports from Canada for the week ending June 12th came in at 84,727 head, down from 88,535 head the previous week and compared to a 4-week moving average of 84,223. Feeder pig imports for the year have reached 2.18 million head, down 8.7% from last year. For the pig report for release on Friday, traders see little in the way of changes from the March report. In other words, producers did not expand or further reduce the herd much. Market hog supply is thought to be near 3% below last year and breeding hogs down 4% from last year.
TODAY’S GUIDANCE: The market has the supply fundamentals to see further appreciation ahead, but it will be important to see solid demand news. Weak pork values late yesterday and a weak stock market overnight do not help. August hogs are on a nice recovery rally off of the June 7th lows but a bit overbought.
TODAY’S MARKET IDEAS: August hogs next resistance is at 86.00 with some light resistance at 84.55. Support back at 82.47 and 81.65. New buyers may want to wait for a more significant correction before entry.
Hog Market Commentary – 2010.06.24
by Terry Roggensack on June 24, 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!
A steady tone for the cash hog market has helped to provide some support this week but the premium structure of August futures to the cash may be a limiting factor ahead of a key report for Friday. Weakness in pork overnight and demand for meat in general is a growing concern. A bearish tone for outside markets and signs of a weakening US economy were factors which helped the hog market give back part of the recent gains. Positioning ahead of Friday’s USDA Hogs and Pigs report and talk of the overbought technical condition added to the negative tone yesterday. Cash markets had a positive tilt and the cold storage report this month was supportive but this news failed to provide much support to the market and futures drifted lower. The futures premium to the cash market was also viewed as a slight negative. The CME Lean Hog Index as of June 21st came in at 80.33, up 51 cents from the previous session and up from 77.83 the week before. The estimated hog slaughter came in at 399,000 head yesterday. This brings the total for the week so far to 1.165 million head, down from 1.201 million last week at this time and down from 1.227 million a year ago. Pork cutout values, released after the close yesterday, came in at $83.80, down 48 cents from Tuesday but up from $81.34 the previous week. Hams and loins were lower and traders are somewhat concerned that the export market may be slowing due to weakening world economy. Weekly average weights for Iowa/Minnesota for the week ending June 19th came in at 270.6 pounds, down from 271 the previous week and up from 268.7 pounds last year. Feeder Pig imports from Canada for the week ending June 12th came in at 84,727 head, down from 88,535 head the previous week and compared to a 4-week moving average of 84,223. Feeder pig imports for the year have reached 2.18 million head, down 8.7% from last year. For the pig report for release on Friday, traders see little in the way of changes from the March report. In other words, producers did not expand or further reduce the herd much. Market hog supply is thought to be near 3% below last year and breeding hogs down 4% from last year.
TODAY’S GUIDANCE: The market has the supply fundamentals to see further appreciation ahead, but it will be important to see solid demand news. Weak pork values late yesterday and a weak stock market overnight do not help. August hogs are on a nice recovery rally off of the June 7th lows but a bit overbought.
TODAY’S MARKET IDEAS: August hogs next resistance is at 86.00 with some light resistance at 84.55. Support back at 82.47 and 81.65. New buyers may want to wait for a more significant correction before entry.
Tags: Hogs, Livestock
About Terry Roggensack