Weekly Purcell Report

US - Agricultural US Commodity Market Report by Wayne D. Purcell, Agricultural and Applied Economics, Virginia Tech.
calendar icon 27 August 2003
clock icon 2 minute read

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The situation in the pork complex is much less bullish, of course, because the supply side numbers are substantially different in relative terms.

The October contract that dipped under $51 during mid-July rallied toward $54.75, and then dipped again has climbed back into the $53.50-$54 range. I would be inclined to continue to sell this market on any rallies up into the $54.75-$56 price range, which would be at least a 50 percent correction on this last move down in the hog complex.

We should see increasing daily slaughter levels on a seasonal basis as we move through August into September and October, and I don't think even the bull market in cattle is going to pull this pork complex much higher.

Keep in mind also that when we see corrections to the downside in cattle we will get no help from the cattle complex and any price advances in hogs are likely to falter. So, I like the idea of keying off this October contract and see anything back in that $54.75-$56 range as an opportunity to place short hedges and take profits on long hedges.

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