Below is a sample of The Hightower Report’s 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 technical action appears to be improving for July hogs as the market managed to penetrate a significant downtrend channel off of the late April to mid-May highs and closed above the break-out. While the cash outlook is still sluggish, futures are already holding a discount. The CME Lean Hog Index as of May 26th came in at 93.78, down 29 cents from the previous session and down from 95.20 the week before. This leaves July hogs at a significant discount to the cash. The market managed a continued rally yesterday despite a weak tone to the cash market as traders are hopeful that improving weather and less pork production this week might help stabilize the cash market. Pork production last week was 420.7 million pounds, up 7% from last year. July hogs traded sharply higher on the session early yesterday with follow-through technical buying from the reversal-type action on Friday and from the discount of futures to cash. This supported a move back over 90.00 and a move to a 5-session high. Cash hogs came in $.50-$1.00 lower on the session yesterday and cash looks steady to $.50 lower for today. Pork cutout values recovered some on Friday after sharply lower trade on Wednesday and Thursday. Pork cutout values, released after the close yesterday, came in at $89.86, down 18 cents from Friday and down from $93.46 the previous week. Talk of the oversold condition of the market helped support the rally. Talk of poor packer profit margins has traders concerned with lower cash hogs again this week as pork values need to move higher or cash values lower in order to pull margins back to a more normal level. The estimated hog slaughter came in at 423,000 head yesterday. This brings the total for the week so far to 425,000 head, down from 805,000 last week at this time but up from 413,000 a year ago.
TODAY’S GUIDANCE: The export outlook remains mostly positive but the pork cut-out market suggests that exports may have slowed from the fast pace of the spring. Production is down this week but the market appears to be still absorbing the larger than expected production of the past few weeks and a sluggish movement of pork thought the pipeline. The market acts like there is a near-term low in place but it will be important to see higher trade for pork for any confirmation of a low. Negative packer profit margins will be an issue this week until cash moves lower or pork moves higher.
TODAY’S MARKET IDEAS: Support for August hogs comes in at 88.70 with 91.07 and 91.90 resistance. Support for July hogs comes in at 88.05 with 90.60 and 91.57 as short-term resistance.
Hogs: Market Acts Like Near-Term Low In Place; Will Need Confirmation
by Terry Roggensack on June 1, 2011
Below is a sample of The Hightower Report’s 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 technical action appears to be improving for July hogs as the market managed to penetrate a significant downtrend channel off of the late April to mid-May highs and closed above the break-out. While the cash outlook is still sluggish, futures are already holding a discount. The CME Lean Hog Index as of May 26th came in at 93.78, down 29 cents from the previous session and down from 95.20 the week before. This leaves July hogs at a significant discount to the cash. The market managed a continued rally yesterday despite a weak tone to the cash market as traders are hopeful that improving weather and less pork production this week might help stabilize the cash market. Pork production last week was 420.7 million pounds, up 7% from last year. July hogs traded sharply higher on the session early yesterday with follow-through technical buying from the reversal-type action on Friday and from the discount of futures to cash. This supported a move back over 90.00 and a move to a 5-session high. Cash hogs came in $.50-$1.00 lower on the session yesterday and cash looks steady to $.50 lower for today. Pork cutout values recovered some on Friday after sharply lower trade on Wednesday and Thursday. Pork cutout values, released after the close yesterday, came in at $89.86, down 18 cents from Friday and down from $93.46 the previous week. Talk of the oversold condition of the market helped support the rally. Talk of poor packer profit margins has traders concerned with lower cash hogs again this week as pork values need to move higher or cash values lower in order to pull margins back to a more normal level. The estimated hog slaughter came in at 423,000 head yesterday. This brings the total for the week so far to 425,000 head, down from 805,000 last week at this time but up from 413,000 a year ago.
TODAY’S GUIDANCE: The export outlook remains mostly positive but the pork cut-out market suggests that exports may have slowed from the fast pace of the spring. Production is down this week but the market appears to be still absorbing the larger than expected production of the past few weeks and a sluggish movement of pork thought the pipeline. The market acts like there is a near-term low in place but it will be important to see higher trade for pork for any confirmation of a low. Negative packer profit margins will be an issue this week until cash moves lower or pork moves higher.
TODAY’S MARKET IDEAS: Support for August hogs comes in at 88.70 with 91.07 and 91.90 resistance. Support for July hogs comes in at 88.05 with 90.60 and 91.57 as short-term resistance.
Tags: Hogs, Livestock
About Terry Roggensack