Weekly Purcell Report

US - Agricultural US Commodity Market Report by Wayne D. Purcell, Agricultural and Applied Economics, Virginia Tech.
calendar icon 27 May 2003
clock icon 3 minute read

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In the hog market, we are seeing the correction to the downside that I have talked about and expected in the June lean hogs. We are probably going to dip down toward the $62 level before this current little price plunge is over.

Cash hogs coming into the week are flirting with the $60 price level on a carcass basis, and that is, of course, in profitable territory for virtually all producers. We do need to get cash-futures basis in line, and that is part of what is going on with some backing off in the June from the $67.675 high that was recorded about five to six trading days back.

There is no indication that cash prices were going to surge into the $60s to justify a higher futures price as we move into and toward the first of June. Let this market correct to the downside before you buy back any short hedges on a selective hedging basis.

If you are primarily interested in hogs later in the summer and fall and are watching the June chart as a messenger of the marketplace, let this correction to the downside get complete and have a day or two of higher trade and then sketch in the trend line that would hook the lows down below $58 with the bottom of the correction that we are now going through. Then you can be prepared to forward price late summer and fall hogs when the market runs back up toward the highs we recorded a few days back or let this market trend to the upside and place short hedges only when we see a close below the uptrend line on the chart.

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