Weekly Purcell Report

by 5m Editor
31 March 2004, at 12:00am

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

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The lean hog futures recorded new contract highs in Monday's session reaching the $68.15 level on the April.

I have no problems with continuing to place short hedges in this market on a scale up basis.

These are excellent profits for most producers during a period when we normally expect to see seasonal price weakness as the fall pig crop comes to market.

Of course, the key here is that since the December announcement of BSE closed the trading channels for beef, we've seen this April futures contract come up from a low of $53.55 on December 18 to current levels around $65.25.

That is a $12 surge in the market with only modest corrections. I would continue to suggest you do your forward pricing in the spring and late spring contracts in the April or June contracts, but I am not excited about getting pricing done in July where we have reached the $70 level this week.

I think there is still some upside potential in this market with no catastrophic price breaks likely.

5m Editor