Hog Commentary

Peter McGinnGeneral Commentary

February lean hogs sold off more than a dollar today, settling at 84.25. The national direct cash hog price dropped 79 cents on Monday, with the Iowa/Minnesota market down $1.98. The CME lean hog index is down 71 cents to $80.84 (as of Dec. 16), the lowest level since Jan. 27, signaling the cash market has not yet put in a seasonal low. February lean hog futures ended Monday at a $4.86 premium to today’s cash index quote, which likely limits the upside in front-month futures until traders sense a seasonal low. Pork production is continuing to slow, if Europe is any indication, the market inventory is down from 7.8 million to 7.1 million which is roughly a 9% decrease in market inventory.

Technically viewing the market, it seems to have hit resistance on Monday and last Friday around the 40-day moving average and retraced down to the most recent level of support around $84. Friday the USDA Hogs and Pigs report will come out at 2:00pm central time, as of right now I do not see any pre-report estimates. I suspect that the rest of the week will be lightly traded much like today and yesterday, with some profit taking bound to happen in my opinion.

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Peter McGinn

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