The Hightower Report

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 market saw negative price action yesterday even with positive outside market influences and this may have helped spark a strong bounce overnight. The market ended lower on the session yesterday but well up from the mid-session lows. June hogs traded moderately higher early in the session to challenge last week’s highs finding support from other commodity markets and a sharp drop in the US dollar. However, a sell-off in cattle helped spark a long liquidation trend which drove the market below Tuesday’s lows. Futures were moderately lower on the session into the mid-day with an outside trading day. Cash hogs traded steady to $.50 lower on the day. Some weakness in pork values late Tuesday added to the negative tone. Traders had expected weaker packer demand for live inventory this week due to the smaller slaughter schedule. Cash is called steady to $1.00 higher today. Into next week, packers face a full schedule and a seasonal decline in supply for the next few months and packer profit margins have held positive this week. The estimated hog slaughter came in at 413,000 head yesterday. This brings the total for the week so far to 1.214 million head, down from 1.228 million last week at this time and down from 1.220 million a year ago. Lean Hog Index for the two days ending April 18th was 94.17. Pork cutout values, released after the close yesterday, came in at $96.34, up 3 cents from Tuesday and up from $96.31 the previous week. More and more restaurants and fast food outlets are adding bacon to menu items and this has provided a base of demand during the off-season. Prices this year are already pushing $1.50 as compared with $1.10 last year at this time and the market faces a declining supply ahead. Weekly average weights for Iowa/Minnesota for the week ending April 16th came in at 272.2 pounds, down from 273.1 the previous week, but still up from 269.3 pounds last year. The data suggests that producers are becoming more current with marketings.

TODAY’S GUIDANCE: Another sharp drop in the dollar and bullish tone for commodities should help support the market today and a turn up in cash prices into next week should add to the positive tone.  June hog support comes in at 101.62 and 100.97 with 104.17 as next good resistance.

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!

Ideas that Japan will need to import more pork over the near-term helped support a bounce yesterday but the market was under heavy selling pressure overnight. Cash is called steady on the day and pork values were mostly steady overnight so the reason for the active selling is hard to peg. A prominent investment banker in the US urged clients to take profits on commodity long positions yesterday and overflow selling from this may be helping to spark some selling. June still holds a premium to the cash market of near 9-10 cents. June hogs closed higher on the session yesterday and managed to push to a new 3-session high. Ideas that the cash market will remain in an uptrend into next month and a firm tone to pork cut-out values on Friday helped to support. The market traded near unchanged early in the session but saw buying emerge from fund traders to support. Cash hogs traded steady to $.50 lower and this may have helped spark the early weakness but ideas that slaughter levels will tighten ahead and that the lower US dollar will help keep exports firm helped to support. In addition, traders see the cash market moving higher into the middle of this week. Ideas that packer margins are still in the black plus news that pork cut-out values were higher on Friday helped to support as well. Pork cutout values, released after the close yesterday, came in at $94.59, down 1 cents from Friday but up from $94.30 the previous week. While closing higher, the close was well off of the highs yesterday. The estimated hog slaughter came in at 403,000 head yesterday. This was down from 405,000 last week but unchanged from a year ago as this time. Lean Hog Index for the 2 days ending April 7th was 91.23. China has authorized three Brazilian pork producers to start exporting pork to China for the first time.

TODAY’S GUIDANCE: Weakness in outside markets and some speculative long liquidation selling emerged to drive the market sharply lower overnight. High open interest, high weights and sluggish packer demand are all seen as negative short-term forces.

TODAY’S MARKET IDEAS: June hog short-term resistance is at 101.37 with support back at 99.32 and 98.20.

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 market was primed for a correction and it came fast and furious yesterday but the market held support and closed back up near the highs of the day. With the lean Hog Index for the two days ending March 28th at 86.12, it was hard for investors to get too excited about buying April hogs near 93.50 or June hogs near 103.50 and once the long liquidation trend started, the break attracted increased selling as longs moved to the sidelines. The positive set-up for the cash market and talk of strong exports are factors to support but the wide basis is a limiting force and this combination could keep the trade volatile over the near-term. April hogs closed just 5 points lower on the session yesterday and up 295 from the lows and June hogs closed just 32 lower on the session and up 267 from the lows. The market drove sharply lower on the day early in the session and June hogs were down as much as the 300 point limit early before a bounce off of the lows. While cash hogs were higher on the day, traders saw weakness in pork cut-out values late Tuesday and the huge premium of futures to the cash market as a reason to spark long liquidation and profit-taking selling. The lack of new buying interest on the early break led to the very steep losses. Cash is expected to be steady today. Weakness in the ham market and ideas that the big premium of futures to the cash market could cause average weights to rise were also seen as negative forces. News from two of the largest meat companies in the US that Japan has been buying chilled meat since the earthquake helped to provide underlying support. Pork cutout values, released after the close yesterday, came in at $94.78, up $1.51 from Tuesday and up from $92.78 the previous week. This is the highest pork trade since August 25th. The ham market recovered and bounced $3.97 to $81.53. The estimated hog slaughter came in at 422,000 head yesterday. This brings the total for the week so far to 1.252 million head, up from 1.243 million last week at this time but down from 1.295 million a year ago.

TODAY’S GUIDANCE: Average weights are already running more than 4 pounds above last year and this may widen further as the strong futures premium might encourage producers to hold off and feed hogs to a higher weight. While export demand is strong, it will take a continued flow of exports to see a strong enough cash rally to have traders add an even higher premium to the cash market. On the other hand, pork cut-out values are strong and the extent of export demand is hard to gauge.

TODAY’S MARKET IDEAS: June hog support comes in at 100.45 and 99.32 with 107.75 as a longer-term upside objective.

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 market may be in a position to see strong export demand ahead and a sharp break in the US dollar overnight plus a better export demand outlook as traders access needs in Japan for a recovery are supportive forces. However, high average weights and the premium of futures to cash along with a long liquidation tone for many commodity markets are potential obstacles to a sustained uptrend. The hog market managed to close moderately higher on the session yesterday and recover part of the recent losses despite another sharp break in the cattle market. April hogs saw some solid gains on the session early in the day but gave back much of the rally into the mid-session. Ideas that the Japanese situation could result in an eventual need for increased imports of protein helped to support the early bounce but a turn down in cattle and corn helped to pressure. Weakness in the US stock market after some stability early added to the negative tone. Cash hogs traded steady to $.50 lower on the day and pork cut-out values were lower late Tuesday. A jump in pork values late yesterday could be a sign of better demand ahead. Ideas that much of the panic selling due to the macro economic situation in Japan helped to ease the selling pressures and even talk that if the radiation situation were to worsen that this might even stimulate demand for ready-to-eat protein like pork helped to support. The CME Lean Hog Index as of March 14th came in at 85.00, down 47 cents from the previous session and up from 84.46 the week before. The estimated hog slaughter came in at 420,000 head yesterday. This brings the total for the week so far to 1.248 million head, down from 1.259 million last week at this time and down from 1.271 million a year ago. Pork cutout values, released after the close yesterday, came in at $91.76, up 47 cents from Tuesday and up from $90.71 the previous week. Weekly average weights for Iowa-Southern Minnesota as of March 12th came in at 274.3 pounds, up from 272.6 the previous week and up from 270.5 pounds last year.

TODAY’S GUIDANCE: The downside looks limited from here and pork product prices may get a boost if South Korea and Japan begin to increase coverage. With extensive damage in Japan and a loss to aquaculture and livestock operations in the north, there could be a significant short-term need to increase imports of pork. Look for the market to forge a short-term low soon.

TODAY’S MARKET IDEAS: Another jump in average weights is a negative development and weights remain well above last year. This may or may not be a significant factor depending on the short-term export demand. Look for a recovery bounce to the 88.25-89.55 zone for April hogs over the near-term. June should bounce back to 98.15. June hog support comes in at 94.72 with 97.55 and 98.45 as first good resistance. Consider buying the April hog 86.00/93.00 bull call spread.

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 market continues to see a long liquidation selling trend as the burst in export demand ended in Mid-February and the market seems to be trying to find a level of support. Fears that pork cut-out values could remain seasonally weak over the short-term plus hefty hog weights has helped spark increased long liquidation selling. Open interest is down more than 20,000 contracts from the February 16th key reversal day. The market closed sharply lower on the session yesterday as stops were activated on the move under last weeks lows and April hogs pushed to the lowest level since January 25th late in the day. The market traded near unchanged on the session early in the day but speculative sellers turned active with a turn down in the stock market and this caused active long liquidation selling to drive the market sharply lower into the mid-session. Cash markets were steady but this did not slow the selling as futures remain at a premium to the cash market. Pork cut-out values were higher on Friday but fears that the economy will take a hit from higher energy prices helped to pressure many agricultural markets. A sluggish tone to the cash market for this week and higher than normal weights helped to pressure. Cash is called steady today and packer margins are still deep in the black. The CME Lean Hog Index as of March 3rd came in at 84.35, up 16 cents from the previous session and up from 83.60 the week before. This leaves the April hogs at a premium of just 200 points. The estimated hog slaughter came in at 414,000 head yesterday. This was down from 415,000 last week but up from 410,000 a year ago as this time. Pork cutout values, released after the close yesterday, came in at $91.14, down 11 cents from Friday and down from $91.96 the previous week.

TODAY’S GUIDANCE: The market may be near a near-term low but it may take a firm tone to pork values and some decline in average market weights for hogs to suspect a turn back up in the cash markets.

TODAY’S MARKET IDEAS: April hog support comes in at 85.27 with resistance at 87.57. June hogs are still operating under the negative technical influence of the February 22nd reversal from an all-time high price but the downside has been limited. Look for support near 97.80 or 96.85. Watch for some of these key support levels to hold this week and watch for signs of a near-term low.

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 market continues to struggle with negative outside market forces and a stiff premium of futures to the cash market. However, the short-term cash fundamentals still look positive and the cash market is likely to remain in a steady uptrend into the spring. Packer profit margins have been enhanced this week as the run-up in pork values has come faster than the cash market advance. Pork cutout values, released after the close yesterday, came in at $92.47, up 69 cents from Tuesday and up from $89.05 the previous week. This is the highest pork value since August 30th. The record high for cut-out values came in at $96.74 on August 24th of 2010. Talk of continued firm export markets with South Korea as a key buyer has helped support the cut-out this week. Exports now represent nearly 20% of total production, but even without the export market, pork supply looks to tighten into the spring. Pork production typically declines about 250 million pounds from the 4th to the 1st quarters. This year pork production is expected to drop 472 million pounds, according to the USDA. This would be largest drop going back to at least 1990. Production is also expected to decline from the 1st to the 2nd quarters. The forecast for this year is for a decline of 305 million pounds compared to an average drop of around 200 million.

Lean hogs closed near unchanged yesterday but well off of their lows after opening sharply lower on the day. The market fell under pressure early from concerns that the world economy would suffer from soaring energy prices and other discord in the wake of the unrest in the North Africa/Middle East region. In addition to that, the steep premium of futures to the cash market has kept commercial interest lacking. Weekly average weights for Iowa/Minnesota came in at 273.1 pounds, which was up from 272.9 pounds the previous week and 268.4 pounds last year. The CME Lean Hog Index as of February 21st came in at 82.90, down 34 cents from the previous session and down from 85.65 the week before. The estimated hog slaughter came in at 421,000 head yesterday. This brings the total for the week so far to 1.237 million head, down from 1.242 million last week at this time and down from 1.273 million a year ago.

TODAY’S GUIDANCE: Another jump in pork cut-out yesterday led by the ham market should help support ideas that the market is likely to continue to hold a hefty premium to the cash market as cash looks to remain in an uptrend. Cash is called steady to higher today and packer margins have improved this week. The threat of long liquidation selling due to outside market weakness remains in effect today but the jump in pork values may keep buyers active.

TODAY’S MARKET IDEAS: April hog support at 90.02 held yesterday and the market is back up in the recent trading range. Support today comes in at 91.15 and 90.52 with 92.55 and 93.10 as resistance. A move through resistance leaves 96.87 as a possible longer-term technical objective.

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 market has moved sideways in the past week consolidating the strong gains from late January and this appears to be helping to alleviate a short-term overbought condition of the market. Cash markets continue to rally and this has helped narrow the stiff premium of futures to the cash market. The CME Lean Hog Index as of February 7th came in at 82.74, up 70 cents from the previous session and up from 80.00 the week before. April hogs closed unchanged yesterday after choppy and two-sided trade. The market pushed moderately higher on the session early finding support from higher corn values while June pushed to a new contract high and a new all-time high of 101.97 before closing just slightly higher on the day. Cash markets were steady to $1.00 higher which helped support the market but traders do not seem too active at buying April hogs near 91.25 with cash near 82.75. Concerns that some hogs could back-up in the country due to weather and stiff premium helped to ease the buying support for April hogs as well. A warm-up in the Midwest into next week could spark increased marketings. Average weights for Iowa/Minnesota for the week ending February 5th came in at 273.8 pounds as compared with 273.2 pounds the previous week and 268.9 pounds last year at this time. At nearly 2% higher than last year, the hefty weight could add significantly to the total tonnage of pork production. The estimated hog slaughter came in at 422,000 head yesterday. This brings the total for the week so far to 1.249 million head, up from 1.022 million last week at this time and up from 1.241 million a year ago. Pork cutout values, released after the close yesterday, came in at $89.16, up 45 cents from Tuesday and up from $88.56 the previous week.

TODAY’S GUIDANCE: Weakness in equity and other commodity markets could spark some additional long liquidation selling over the near-term but the downside looks limited if pork cut-out remains firm.

TODAY’S MARKET IDEAS: April hog resistance is at the 92.05-92.52 zone with 89.80 and 88.70 as key support levels. Position traders can wait for a more extensive correction to buy.