Weekly Purcell Report

by 5m Editor
3 September 2003, at 12:00am

US - Agricultural US Commodity Market Report by Wayne D. Purcell, Agricultural and Applied Economics, Virginia Tech.

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The cash hog market has rallied in the futures complex based on some strength in cattle.

The charts in the lean hog market looks better than one might have expected. In the presence of all the uncertainty in this market, I am rather impressed with the October contract which traded as high as $55.275 in Tuesday's session.

That is a bit above the high from August 8 at $54.65 where I thought we would see some resistance. I also see this as a relatively complete 50 percent correction of the last down move from the high on July 7 at $59.40 down to the lows at $50.75 that occurred at the end of July.

The highs we are seeing across the past few days are almost exactly a 50 percent correction of that last major move down, and I would be very interested in replacing short hedges in this hog complex in the October and possibly in later contracts at the same time.

We are almost sure to see some seasonal pressure on the cattle market, and that may be complicated by more numbers coming across the Canadian border.

We will certainly see an increase in daily slaughter levels in hogs as we move through September through October and November.

5m Editor