Weekly Purcell Report

by 5m Editor
12 November 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 hogs, the cash market on a lean hog basis is around $49, and the December has been at some premium to that and is running into selling pressure along with the cattle markets in Tuesday's session.

I would hold short hedges on the December hog futures and not buy them back as a selective hedge until we see a test of the August 18 low at $49.65. At that level, I would think taking profits on short hedges would look reasonable, and I suspect that packing plants will be starting to place long hedges on the hogs at those levels.

The April chart is looking substantially different with Tuesday's levels above $60 and not that much off the September highs above $62.

The recent, relatively heavy slaughter levels compared to what we would have expected out of the September report suggest some lingering liquidation that may make the supply side pork price more positive by the time April gets here.

I would wait and do nothing until we see the current dip to the down side run its course, then look for a rally back up toward the October 15 high around $62.40 on that April contract as a place to establish some short hedges.

5m Editor