Weekly Purcell Report

US - Agricultural US Commodity Market Report by Wayne D. Purcell, Agricultural and Applied Economics, Virginia Tech.
calendar icon 3 December 2003
clock icon 2 minute read

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As the fundamentals improve, there is renewed enthusiasm surrounding the retailer's move toward featuring of pork.

Lean hog contracts rallied strongly on Friday and Monday but are showing a more negative day in Tuesday's activity. I have been suggesting if we work from the December 2003 futures contract, we need to be thinking about buying back short hedges in the $49 to $50 range. I believe that is going to continue to be a good line of advice.

We are lower Tuesday, and we may dip back down toward the $49 level again on that nearby contract, but I think we are putting in at least a short-term bottom. Thus, I would not want to be on short hedge positions as a producer, and packers and other users of long hedges in this market ought to be thinking about being long and getting long hedges established in the $49 to $50 range on the December.

That level translates to about $56 to $57 in the April 2004 contract where we see substantially better prices and evidence of a price discovery process that sees a brighter supply and demand balance as we move into 2004.

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