Those statements probably should come as no surprise for two reasons.

First, from recent price levels, the most logical price movement is down.

Record after record has been set this summer in the cash hog market and August futures went off the board at record levels as well.

Second, it is mid-August and the normal seasonal decline in hog prices should be here soon as hog supplies grow.

We look for fall supplies to top out just short of 2.4 million head per week in October with the possible exception of a big week near Christmas.

Both October and December LH futures are well off their contract life highs set back in the spring.

One big question in traders’ minds is whether those contracts will rally to a) challenge the contract life highs and b) close the VERY large basis versus cash hogs and the LH index.

Several reports this week have mentioned that October is an attractive buy given these basis levels. Adding to that attractiveness is the current incentive to move hogs to market to beat the price decline. Hog prices almost always head south once Labor Day pork buying is over — and that should happen soon.

Further Reading

-

You can view the full report by clicking here.