Weekly Purcell Report

by 5m Editor
6 October 2004, at 12:00am

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

December lean hogs are nearly $6 off the September 24 high of $71.80 as the market starts to reflect the inevitable possibility of daily slaughter levels moving to still higher numbers. Demand coming over from banned beef exports has continued to help this market and domestic demand is also in good shape.

But there are limits to what prices can be sustained and I am seeing signs that this market will be sold on rallies back to $70 and higher in spite of current cash prices in the mid to high $70s.

By the time December gets here, we will have moved through the high daily slaughter levels in November and into the intense competition from poultry around Thanksgiving and cash hog prices will be lower.

Look to place or replace short hedges on late 2004 hogs and into January and February on rallies but hold off on later 2005 sales until we see those markets rally again.

5m Editor