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Weekly Purcell Report

by 5m Editor
14 April 2004, at 12:00am

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



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April lean hog futures had pushed up to $68.15 on March 29 and then dipped to $62.22 on April 7. Tuesday's action is above $64, about in line with a direct cash trade that has weighted average prices above $61.

Anticipating a summer rally, the July had continued up and recorded a new contract high of $74.60 on Monday.

Tuesday's prices are sharply lower, perhaps due to profit taking by speculators and selective long hedgers in this market.

Lift short hedges in the April as you sell the hogs, and let's watch the June and July for signals to hedge the late spring and summer hogs in the June and July futures respectively.

Contract high on the June is Monday's $76.47, and I expect this market to continue Tuesday's correction to the downside from that high. We have not had a significant correction in the June or the July since this rally started in late February at prices some $12 lower.

After a correction, this market will try the highs again, and I would have short hedge sell orders just below the $76.47 high on the June and place hedges on summer hogs in the July and August contracts at the same time.


5m Editor