Weekly Purcell Agricultural Commodity Market Report Wayne D. Purcell Agricultural and Applied Economics Virginia Tech

The September 24 Hogs and Pigs report put an end, at least temporarily, to the roaring bull market we have been seeing in hogs.

Helped by export movements to Japan where U. S. beef is still waiting for the channels to open again, hog futures had staged a contra seasonal price pattern with December futures climbing from as low as $60.40 on August 25 to as high as $71.80 on September 24 before the release of the report. There were no huge surprises in the report numbers.

The "kept for breeding" category was near the top end of the pre report range of expectations and lean hog futures from December out through summer of 2005 were mostly down the $2.00 daily limit on Monday. I have been suggesting being short in this market and holding short hedges even if you had to answer margin calls, and I would hold those short positions.

We looking at a very modest supply-side cycle increase that is taking the highs off prices out through 2005 and we will see the beef shipments to Japan open up again sometime in the next several months and that will hurt the hogs from the demand side of the price equation.