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

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In hogs, I am encouraged by the fact that the October lean hog contract was able to hold back in late June when it dipped down to $50.75 and didn't go all the way down to the April lows at $49.75.

Within the past week after this market made something between a 38 percent and 50 percent correction back to the upside, it dipped back toward that recent $50.75 low again and appears to be turning higher.

I would have been interested in buying back short hedges in this market on this dip toward the low.

The low last Friday only went to $51.30, so we saw buying emerge as the fundamentals in this market start to look a bit better.

You can sketch a downtrend line across the high on July 10, which is up around the $58.90 level, and the more recent high on that corrective rally, which occurred on August 8 at $54.65.

I expect to see a close above that downtrend line across the next few days. Tuesday's close was very strong.

That trend line break will be a signal to place long hedges if you need to cover hog costs in this market and a signal to buy back any short hedges that you have in place if you are operating on a selective hedging basis.