Weekly Purcell Report

by 5m Editor
24 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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In the lean hog market, we have weighted average prices around $59 on a carcass basis, and those prices have held up surprisingly well.

We have a hog and pig report coming, which is likely to show 2 percent to 3 percent smaller breeding herd, but many analysts are starting to think we have already seen much of the impact of that somewhat smaller breeding herd and that we are in for somewhat higher daily slaughter levels as we move into October and November.

I would share that sentiment and recognize that this market has backed off from and is still trading below the $61.20 high that was recorded back on September 11 in the nearby October, and the high on that same day on the December was $59.50.

I would definitely look at placing short hedges on these fourth quarter hogs if that December can rally back up toward that past high. Given the tops that we see across more recent days that quit in the $58.50-$58.65 area, I might lower my sights a bit and look at getting these hogs hedged if you don't have them hedged on anything back up toward the $58.50 level or better on this December lean hog contract.

5m Editor