Weekly Purcell Agricultural Commodity Market Report Wayne D. Purcell Agricultural and Applied Economics Virginia Tech

Need a Product or service?

Hogs are continuing to show a weighted average carcass-based price of $46-$47, about $34 to $35 on a live weight basis.

April lean hog futures are $9 off the late December highs.

This market recorded a head-and-shoulders top by mid-January and a number of trend line sell signals in the $56 to $58 range. Hold short hedges here. Daily slaughter levels usually run higher in March and April than in February as the fall pig crop comes to slaughter.

The U.S. Department of Agriculture predicts that pork production will be down 1 percent in 2003, with beef production expected to be down 4 percent. If those numbers hold, it will be easier for cattle to hold a big premium in price to slaughter hogs.

Historically, it has been hard to justify a $75 cattle market or better with live weight hog prices more nearly in the mid-$30s, and that will be a factor again this year as retailers tend to move to pork for featuring and specials.

Look for a summer rally in hogs to get short hedges set again, and we should see at least a modest rally via a correction of the $9 break since early in the year within the next few weeks. Sell rallies in the April back up to the $57 area and look at the selling opportunities on the summer futures at the same time.