Lean hogs sold off sharply today with follow through selling after a corrective pullback the final three days last week. February lean hog futures finished last Friday $7.51 above the CME lean hog index, which is down 55 cents to $80.19 (as of Dec. 29). Traders aren’t yet convinced the cash index has put in a seasonal low, which could pressure the market. The flip of the calendar could attract new buyers if initial seller interest is limited, though the premium futures hold to the cash index is likely to limit buyer interest until traders are convinced a seasonal cash low is in place.
Hogs positioning in the Commitment of Traders for the week ending December 27th showed Managed Money traders were net long 52,248 contracts after increasing their already long position by 15,862 contracts in just one week and the aggressive buying is a short-term positive force. Non-Commercial & Non-Reportable traders were net long 37,700 contracts after increasing their already net long position by 15,417 contracts. February basis on December 28th was -9.84, which was up 83 cents on the day.
The chart analysis in my opinion shows the next level of support to be $84 for the February contract. With the large amount of volume traded today and weak cash fundamentals, I believe that there will still be more pressure to the downside for hogs.
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Peter McGinn
Account Executive
Walsh Trading, Inc.
Direct: 312-985-0931
Toll Free: 800-556-9411
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research