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 short-term trend looks to remain down over the near-term, but the downside may be somewhat limited as futures already hold a decent discount to the cash market, and global economic growth and “less fear” of a slowdown in global growth could provide some support if exports remain strong. Exports represent nearly 20% of the total pork production. Weekly slaughter should continue to climb, and is already at the highest level since April and should post highs for the year in early December. October hogs closed slightly higher on the session yesterday, but down 120 points from the highs. The pit trade has closed in the vicinity of the lows for five sessions in a row. Weakness in the cash market and ideas that slaughter will continue to increase in the weeks ahead helped to pressure. The market pushed lower and matched Friday’s lows and the lowest level since August 17th, but a lack of new selling interest and a strong recovery in financial and metal markets helped provide some underlying support. There was some buying based on the steep discount to the cash market, and the move over Monday’s highs activated buy-stops and the market surged to sharply higher on the day into the mid-session. Cash hogs came in steady to $1.00 lower; about as expected in some locations but higher in the west. The estimated hog slaughter came in at 408,000 head yesterday, which was lower than expected and could be showing a weaker demand tone from the packer. Traders are a bit nervous that demand will not keep pace with the rising seasonal supply into the 4th quarter, and that this could back-up some animals in the country unless exports can remain strong. This brings the total slaughter for the week so far to 819,000 head, up from 815,000 head last week at this time but down from 868,000 head a year ago. The CME Lean Hog Index as of August 27th came in at 83.89, down 47 cents from the previous session and down from 84.13 the week before. This leaves October hogs at an 875 point discount to the cash market. Pork cutout values released after the close yesterday came in at $91.23, down $2.03 from Monday and down from $96.74 the previous week. This is the lowest pork value since August 16th, and pork values are down 5.7% from last week’s all-time high. Loin prices were down sharply and rib prices fell $9.12 to $123.51, which may be a strong indication that retailers are done booking product for weekend sales.
TODAY’S GUIDANCE: The technical action remains weak, and the COT report showed fund traders holding a net long position of near 48,000 contracts, so some additional long liquidation selling is still possible if support is violated. Next support for October hogs comes in at 73.97 and then 72.10, with 75.20 and 75.97 as resistance.
TODAY’S MARKET IDEAS: The market looks vulnerable to more fund trader long liquidation selling over the near-term.
Hog Market Commentary – 2010.09.01
by Terry Roggensack on September 1, 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 short-term trend looks to remain down over the near-term, but the downside may be somewhat limited as futures already hold a decent discount to the cash market, and global economic growth and “less fear” of a slowdown in global growth could provide some support if exports remain strong. Exports represent nearly 20% of the total pork production. Weekly slaughter should continue to climb, and is already at the highest level since April and should post highs for the year in early December. October hogs closed slightly higher on the session yesterday, but down 120 points from the highs. The pit trade has closed in the vicinity of the lows for five sessions in a row. Weakness in the cash market and ideas that slaughter will continue to increase in the weeks ahead helped to pressure. The market pushed lower and matched Friday’s lows and the lowest level since August 17th, but a lack of new selling interest and a strong recovery in financial and metal markets helped provide some underlying support. There was some buying based on the steep discount to the cash market, and the move over Monday’s highs activated buy-stops and the market surged to sharply higher on the day into the mid-session. Cash hogs came in steady to $1.00 lower; about as expected in some locations but higher in the west. The estimated hog slaughter came in at 408,000 head yesterday, which was lower than expected and could be showing a weaker demand tone from the packer. Traders are a bit nervous that demand will not keep pace with the rising seasonal supply into the 4th quarter, and that this could back-up some animals in the country unless exports can remain strong. This brings the total slaughter for the week so far to 819,000 head, up from 815,000 head last week at this time but down from 868,000 head a year ago. The CME Lean Hog Index as of August 27th came in at 83.89, down 47 cents from the previous session and down from 84.13 the week before. This leaves October hogs at an 875 point discount to the cash market. Pork cutout values released after the close yesterday came in at $91.23, down $2.03 from Monday and down from $96.74 the previous week. This is the lowest pork value since August 16th, and pork values are down 5.7% from last week’s all-time high. Loin prices were down sharply and rib prices fell $9.12 to $123.51, which may be a strong indication that retailers are done booking product for weekend sales.
TODAY’S GUIDANCE: The technical action remains weak, and the COT report showed fund traders holding a net long position of near 48,000 contracts, so some additional long liquidation selling is still possible if support is violated. Next support for October hogs comes in at 73.97 and then 72.10, with 75.20 and 75.97 as resistance.
TODAY’S MARKET IDEAS: The market looks vulnerable to more fund trader long liquidation selling over the near-term.
Tags: Hogs, Livestock
About Terry Roggensack