Archive for the ‘Lean Hog Futures Trading’ Category
Signs of increasing demand for US pork supplies have given hog futures a big boost today. Hog futures have been choppy these past two months, and now pork prices are testing recent resistance levels.
Yesterday, USDA data reflected pork prices rising almost 1% to 90.7 cents per pound – the highest since last summer. So far this year, pork prices are up a reported 10% as meatpackers show an increase of hogs entering slaughter by 1% than this time last year.
“Tighter pork supplies are expected to continue through May and into June, lending support to hog futures. Last year’s drought caused breeding problems resulting in fewer hogs available, while demand remains strong,” said Barb Levy, chief director for Futures & Options Xecution’s futures division in Chicago, regarding the current hog futures situation.
The technical trend for hog futures is up, but has been choppy over the last two months. In order for me to enter long hog futures, I’m going to need a pull-back in price, or a lower-risk entry. Patience is key.
For five years now, there has been a global high inventory of pork with no balance yet in sight. Although domestic pork exports are down the most in a decade, US hog farmers are set to produce yet another record amount pork.
The USDA estimates a record 10.66M metric tons meat not seen in over 40 years. This comes at a time when US exports of pork have fallen a reported 14% in the first two months alone – the most since 2000.
“Pork prices have seen a steady decline since Dec 2012. With exports being down and pork production at highs, I would expect a continued bearish market,” said Jim Allen, licensed futures & Forex broker at Foremost Trading in Geneva IL, regarding the current hog futures situation.
In my work hog futures are at a crossroads, barely hanging on to their uptrend that looked to commence at the beginning of the month. We are long hog futures and are using tight stops.
With signs that overseas demand continues to wane, hog futures closed down today for three out of the last four trading sessions. For the last year (as of yesterday), hog futures are only down just over 3%.
The USDA said yesterday domestic exporters shipped just over 372 metric tones of pork the first two months of this year, which is down 14% from the same time period last year. What might be contributing to the slack demand is Russia’s ban on US pork because they claim it may be tainted with a feed additive that is used to manipulate muscle mass in livestock.
Hog futures trend just turned upward before this recent sell-off, and I am still geared toward the long signals. After last month’s low, hog futures have been making higher-highs and higher low’s, so I’ll be looking for long signals tomorrow.
Hog futures extended their rally off the March 20th lows on the outlook of cheaper US pork creating more demand than more expensive meats. Since March 20th, hog futures have rallied $5.00CWT which has been the largest showing of strength since last September.
Compared to other meats, wholesale pork prices have declined just over 3% over the past year, while at the same time beef and chicken have risen almost 4% and 8% (respectively) according to the USDA. The price discrepancies between the meats cannot be overlooked, and hog futures may be bottoming over this revelation (according to my work).
Jim Allen, licensed futures & Forex broker at Foremost Trading in Geneva IL, had this to say regarding the current hog futures situation, “Pork prices are lagging behind the rest of the livestock prices. This discounted price should lead to more purchasing and lift prices in comparison to the beef and poultry markets.” Allen added, “I would look for a a rally at least until pork (prices) catches up.”
The trend for hog futures is technically down and more price structure needs to happen before the trend can change – in my view. I am looking for short signals with the overall trend in hog futures in the near-term.
There is an outlook that demand for domestic pork is declining somewhat, and hog futures have been in decline for most of the week. Hog futures have been trading between last weeks price range of $95.50 and $87.50CWT.
The USDA shows wholesale pork prices down nearly 5% this year, and spot pork prices falling to the lowest price this week of nearly $74CWT. The amount of hogs processed the first three days this week has been down just over 1% from last week.
Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, had this to say regarding the current hog futures situation, “The cash (hog) market is weak. The dollar has been quite strong and hog (futures) are having trouble finding anything bullish.” Moreno adds, “In my opinion , hog (futures) will continue to move lower.”
The trend for hog futures is clearly down, but may be at a crossroads. I wouldn’t be surprised to see a correction in hog futures even higher.
With the speculation that demand from expensive beef will shift to less expensive pork, hog futures catapulted to $82CWT after meeting last September’s low of $78.50. This spike in hog futures is the highest in eight weeks and may be a reversal-day for pork prices.
USDA data indicates packing plants slaughtering 1.6% more hogs than this time last year. At the same time, the disparity of pork prices versus beef prices is about $1.17, but maybe not for long. A major food company is predicting pork prices to rise this year due to an anticipated reduced beef supply.
“With beef prices rising slight, hogs look relatively cheap. Heading into the spring and summer grilling season this should benefit pork prices,” said Kevin Craney, a senior commodities broker for RJO Futures in Chicago, regarding the current hog futures situation.
Hog futures trend is still clearly down, but today’s reversal in pork prices should be considered a pull-back opportunity to look for short positions once again. Tomorrow’s USDA Crop Report should affect hog futures as well.
There is an emerging outlook that demand for hogs and pork may weaken. Hog futures today have continued lower with the negative sentiment.
Speaking at an economic forum today, Tyson Food’s CEO said “margins have narrowed in its beef and pork units.” The USDA has recently reported domestic meat-packers have slaughtered 4% less hogs than this time last year.
The trend for hog futures is clearly down with no bottoming yet in sight. We are short hog futures from earlier today and expect pork (futures) prices to overall decline into the first week in March.
There are problems with US pork exports to China, and a national meat export group is petitioning the Chinese government to overlook added documentation certifying pork is free of an added substance known as “ractopamine.” Hog futures continue to be pressured by this technicality in this US export trade.
The Chinese officials are rightly concerned wanting documentation certifying all US pork exports to China do not contain that additive that is used to make meat “leaner.” China bans this pork additive, and there have been no reported problems in recent months, but the official paperwork from the US is a Chinese “must have.”
Barb Levy, chief director for Futures & Options Xecution’s futures division in Chicago, had this to say regarding the current hog futures situation, “Hog futures are pressured due to possible problems with exports to China.” Levy added, “Starting March 1st, US hog exports to China will have to undergo a certification process confirming an absence of the additive.”
The trend for hog futures is decisively down with no “bottoming” formation in sight. The degree if buying from today’s lows makes me believe hog futures are due for a pull-back…
Signs of waning pork demand have been weighing heavy on hog futures this week. Hog futures have been down four trading sessions in a row, and today an acceleration to the downside.
The USDA reported yesterday wholesale pork prices plunged almost 2% alone. A major food producer stated last week pork prices just over 2% at the end of December compared to prices the same period the year before.
“Hog futures dropped significantly in today’s session due to weaker demand and increased slaughter figures. Demand is sluggish and is not expected to pick up until March or April,” said Barb Levy, chief director for Futures & Options Xecution’s futures division in Chicago, regarding the current hog futures situation. Levy added, “Warmer temperatures in the Midwest have prompted hog farmers to increase the number of hogs brought to slaughter, keeping pressure on the (hog) futures prices.”
Hog futures are in the process of a trend change from up to down. A lower low for hog futures tomorrow would change my directional outlook.
Hog futures have stalled after yesterdays boost higher on the outlook of domestic US pork supply “outpacing” demand. Hog futures are trading nearly unchanged from yesterday’s close.
The USDA has recently commented on pork prices, stating meatpackers have processed 17% more hogs than this time last year, and their estimate of domestic pork output has risen by 2.2%. Although hog futures were up decisively yesterday, wholesale pork prices actually fell the most in over a week on the news.
The technical trend for hog futures remains up, but are at a crossroads – my reason for offsetting our long hog futures position today. I will only look for low-risk positions in lean hog futures until a clearer picture presents itself.