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Strong export demand and forecasts for lower production over the next month or so could keep the hog market well-supported, despite some disappointing cash market prices over the past week or so. August hogs managed an abrupt about-face yesterday, forming a key reversal to the upside. We recall that it was a sweeping reversal DOWN last Friday that appeared to set the negative tone to the market earlier this week. Yesterday’s rally erased all the losses since that reversal, as the market traded to its highest level since July 2nd. The move was helped along by bullish export data, as the USDA reported US pork exports for May totaled 362.8 million pounds, up from 352.7 million in April and 306.9 million a year ago. Exports claimed 22.4% of pork production in May, the highest percentage since June 2008. The stronger stock market also lent support, and the weaker dollar improves the export outlook. The CME Lean Hog Index as of July 12 came in at 78.65, down 40 cents from the previous session and down from 80.43 the week before. The estimated hog slaughter came in at 404,000 head yesterday. This brings the total for the week so far to 1.195 million head, up from 1.164 million a year ago. Hogs are not getting much support from the cash pork market. Yesterday’s cutout values, released after the close, came in at $81.15, down 97 cents from Tuesday. While this was up from $80.99 the previous week, it was their second lowest level since April 12th. Feeder Pig imports from Canada for the week ending July 3 came in at 65,787 head, down from 67,603 head the previous week and below the 4-week moving average of 77,519. Feeder pig imports for the year have reached 2.4 million head, down 10.3% from last year. Total hog imports reached 84,470 for the same week, down from 86,415 the previous week and below 4-week moving average of 96,847. Cash hogs are expected to trade steady to lower today. Some scheduled plant closings Friday and Monday could keep packer demand lower over the next few sessions. The monthly export data that was released yesterday was for May, which is a significant time lag. While that was bullish news, a better indicator of how export movement is going might be cash pork prices, which includes the daily cutout and individual cuts such as loins. If the recent trend of lower pork prices reverses, it could provide a more current indicator of improving export demand.
TODAY’S GUIDANCE: Yesterday’s reversal to the upside outdid Friday’s sweeping reversal to the downside in both scope and volume. Initial upside targets include retracement levels at 82.05 and 82.775, and eventually the June 22nd high at 85.10.
Hog Market Commentary – 2010.07.15
by Research on July 15, 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!
Strong export demand and forecasts for lower production over the next month or so could keep the hog market well-supported, despite some disappointing cash market prices over the past week or so. August hogs managed an abrupt about-face yesterday, forming a key reversal to the upside. We recall that it was a sweeping reversal DOWN last Friday that appeared to set the negative tone to the market earlier this week. Yesterday’s rally erased all the losses since that reversal, as the market traded to its highest level since July 2nd. The move was helped along by bullish export data, as the USDA reported US pork exports for May totaled 362.8 million pounds, up from 352.7 million in April and 306.9 million a year ago. Exports claimed 22.4% of pork production in May, the highest percentage since June 2008. The stronger stock market also lent support, and the weaker dollar improves the export outlook. The CME Lean Hog Index as of July 12 came in at 78.65, down 40 cents from the previous session and down from 80.43 the week before. The estimated hog slaughter came in at 404,000 head yesterday. This brings the total for the week so far to 1.195 million head, up from 1.164 million a year ago. Hogs are not getting much support from the cash pork market. Yesterday’s cutout values, released after the close, came in at $81.15, down 97 cents from Tuesday. While this was up from $80.99 the previous week, it was their second lowest level since April 12th. Feeder Pig imports from Canada for the week ending July 3 came in at 65,787 head, down from 67,603 head the previous week and below the 4-week moving average of 77,519. Feeder pig imports for the year have reached 2.4 million head, down 10.3% from last year. Total hog imports reached 84,470 for the same week, down from 86,415 the previous week and below 4-week moving average of 96,847. Cash hogs are expected to trade steady to lower today. Some scheduled plant closings Friday and Monday could keep packer demand lower over the next few sessions. The monthly export data that was released yesterday was for May, which is a significant time lag. While that was bullish news, a better indicator of how export movement is going might be cash pork prices, which includes the daily cutout and individual cuts such as loins. If the recent trend of lower pork prices reverses, it could provide a more current indicator of improving export demand.
TODAY’S GUIDANCE: Yesterday’s reversal to the upside outdid Friday’s sweeping reversal to the downside in both scope and volume. Initial upside targets include retracement levels at 82.05 and 82.775, and eventually the June 22nd high at 85.10.
Tags: Hogs, Livestock
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