Weekly Purcell Report

US - Agricultural US Commodity Market Report by Wayne D. Purcell, Agricultural and Applied Economics, Virginia Tech.
calendar icon 26 March 2003
clock icon 3 minute read

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Boxed pork values are down and packer margins are not in good shape as we have seen some increase in cash hog prices across the past few weeks.

We have had, in early week trade, substantially lower lean hog futures, and we are seeing the lowest prices that we have seen since October 2002. July lean hog futures were down nearly $1 in Tuesday's session, closing at $58.95.

The nearby and active April was down only slightly, closing at $51.42. The nearby April has a chance to build a short-term bottom around the $50 level, picking up some support from the lows from last October, and the pattern I see on this chart in recent trading days looks like the market is trying to form a bottom.

You can hook a downtrend line across the late February and mid-March highs and catch this market in a triangle with a flat support plane near $50. Looking out a bit beyond the April time period, we should expect to see better prices in this complex, and I believe we will see rallies.

If you do anything, look at buying back short hedges down here. Users of these slaughter hogs ought to be placing long hedges because, fundamentally speaking, I don't see any reason for the April to break sharply below that $50 level.

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