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

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The March 28 quarterly Hogs and Pigs report was basically positive, largely in line with expectations.

March 1 total inventory was down 2 percent from 2002 levels and, perhaps more importantly longer term, the breeding herd was down 4 percent.

There is no evidence that the pigs per litter are still going up rapidly and offsetting the impact of the reductions in the breeding herd, and this argues for decent prices as we move into the summer months when we normally get the seasonal price strength. But after we got a modest advance in Monday's session, which was the first trading day after the report, this market has turned sour on Tuesday.

The June contract, for example, traded down the daily limit and closed down $1.90 with virtually all the other futures down $1 or more. The modest rally that we had seen in the cash market has run its strength with the national direct hog market now on a carcass basis back down around $46 per cwt.

Obviously, this report was not strong enough to give us any sustained gains in this market. We need to hold short hedges until we see some signs that fundamentals are picking up and starting to give us a bottom.