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Weekly Purcell Report

by 5m Editor
6 July 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 hogs and pigs report on June 25 brought no rapid signs of expansion.

That news has helped kick the distant hog futures higher and started to eat into the huge premium that the summer contracts had been carrying to the late fall and winter contracts.

August lean hogs have been trading in the $76 to $78 range, and after this report, the December is trying to rally and has moved up toward the $62 level, but that still leaves a $14 to $16 premium in the summer contracts.

I think that is probably too much, and I would be inclined to hedge the late summer hogs on rallies back up toward the contract high just above $78.

I would hold off on the late fall and winter contracts until we see the market have a chance to correct some of this discount in the more distant contracts.

The report indicates nothing major going on in terms of expansion, so we should see some better prices than we are seeing this week in those distant hog contracts.


5m Editor