Weekly Purcell Report

US - Agricultural US Commodity Market Report by Wayne D. Purcell, Agricultural and Applied Economics, Virginia Tech.
calendar icon 16 April 2003
clock icon 2 minute read

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The hog market is continuing to struggle in terms of cash valuations, and we are just now starting to approach the point at which daily slaughter levels should work seasonally lower.

The nearby April has traded down toward $48 recently then rallied above $51. It is now gyrating around $50, and I expect to see this market find support in this area and not trade lower.

Those price levels are consistent with the $46-$47 weighted average prices on a carcass basis we are seeing in the cash market. So I would be inclined to look at lifting short hedges on anything out through the early to mid-summer on dips down toward $49 and lower by this April as it moves toward expiration.

On the June contract, there are recent highs just above $60 and then fairly substantial resistance above that in the $62-$63 range. I would definitely be an aggressive seller of these lean hog futures if that June contract can rally back to the $62 level and above.

That puts the live-based hogs back in the $45-$46 range and definitely puts them back in profitable territory with continued relatively low priced corn.

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