Weekly Purcell Report

by 5m Editor
18 February 2004, at 12:00am

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

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February lean hogs blew right through the important high at $63, and I see this as testimony to my frequent observations that pork will get helped from the BSE and the world market closing actions that has been going on in beef.

The April and later futures do not look nearly this strong, and the chart patterns are sharply different from the February. Usually, it is a good idea to sell the April when February pushes up toward contract highs, but April was languishing this week when the February was roaring higher.

The recent high just above $61.50 on the April would be my first pricing objective, and I would not hedge summer hogs at this time. Cash hogs averaged about $60 on Friday and the July futures closed at $60.35.

A seasonal increase into the summer months when daily slaughter levels are the smallest of the year is very reliable and predictable.

The fall pig crop was up 2 percent, but I do not think that will be enough to keep the summer hogs below $60 on a carcass basis or below about $44-$45 on a live basis in the summer months.

5m Editor