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

February lean hogs have dipped more than $7.00 off their $77.70 high. Lean hog traders would like to know what and when with regard to the reopening of beef shipments to Japan.

Each time we hear an agreement will be reached, the lean hog prices dip. Then, there is a follow-up report that says it will still take time and the hog market rallies again.

On the February and the more distant contracts, we are seeing the possibility of a very useful trend line emerge. Not fully there yet on the February, it is a matter of hooking the October 27 low to the lows that are being developed this week.

If the market rallies from the current levels for 2 or 3 days, we can sketch in the trend line and use it to form a big triangle with a flat resistance pane cross the high at $77.70 on the February and a trend line under the market.

In this instance, I would definitely favor selling a rally toward the high and not wait on the close below the trend line. When the beef channels open again, and it could be after February before that happens, we could see some significant moves down in lean hogs.