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

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In the hog markets, we see a substantially different pattern on the nearby charts as compared to the more distant ones. This is a function of the different messages that we had in the recent Hogs and Pigs report, which were bearish on the hogs for the expiring October contract, neutral on the December, and rather bullish when you look out into 2004.

In Tuesday's action, we have December back above the chart gap that was left after the report and back to a level that has retraced about half of the price break that we saw across the past two months from the highs up above $59 all the way toward the $53 level after the report.

With a fairly strong close on the December and the April 2004, for example, trying to make new contract highs in Tuesday's session, I would step back from this market and see how far those more distant hogs that reflect the size of the breeding herd in the recent report can carry this market to the upside.

I believe if the April and beyond contracts in 2004 can make new highs, they will carry the December higher and possibly back up toward its contract high, which is at $59.50 back on September 11. I would definitely be a short hedger and a seller of the December hogs if they can approach that contract high again, and we will need to look at the more distant hogs at the same time to see if attractive profit opportunities are being offered.