Posts Tagged ‘pork futures’
Hog futures may not reflect it now, but spot pork belly prices have been on a tear since May due to the many creative uses of bacon in restaurants which is helping demand, but also depleting supplies. Hog futures are down .65 cents (CWT) today currently trading at $62.32 per pound at the Chicago Mercantile Exchange.
Late last week, the USDA reported a one-year wholesale price high for pork bellies – nearly $1.70 per pound – with much of this price surge due to a 174% spike since making a five-year low just this past April. Pork belly prices continued to make new lows despite the overall hog surge last year after a brutal virus required producers to cull a reported eight million (plus) piglets.
The technical trend for hog futures is at a crossroads – the trend is technically “up,” however lower-low prices tomorrow could turn the trend down. In the meantime, many of us can enjoy the benefits of relatively low pork prices while it lasts.
Hog futures have halted their first-quarter slide and appear to be making their way higher as record production of hogs is reportedly putting more pork on the menu. Hog futures are up over $1.52 per CWT and are currently trading at $65.07 (CWT) at the Chicago Mercantile Exchange.
Wholesale prices of pork are down 40% since last summer and more restaurants are reportedly buying more of the product to serve and apparently this is creating demand. With prices so low compared to beef, domestic pork production is heading for an all-time high this year.
The trend for hog futures appears to be in a very early stage of an up-trend. Prices are still low enough for pork lovers to enjoy their favorite sandwiches or dishes, but a breakout above $72.00 (CWT) could mean steadily higher prices down the road.
Despite energy and gold dominating the news wires recently, lean hog futures are the one commodity that has actually fallen MORE than crude oil. Lean hog futures are actually up 40 points at the Chicago Mercantile Exchange (as of this writing), but in the overall scheme of things the hog market has actually plummeted over 51% since the end of last June.
“Lean hog” (futures) – the market-term designating butchered pigs regardless of size – have only sunk in price after reaching record highs last summer after a terrible disease decimated supplies. Thankfully to the credit of resourceful pig farmers, once the virus ran its course more hogs made it to the market and the USDA projects a 5.5% rise in pork production this year at a time of slowing int’l demand.
The trend for hog futures is down with no clear bottom yet in sight. All lean hog rallies should be viewed as opportunities to get in on the short side – which is where I’m at.
High beef prices and rising demand for pork products as a cheaper alternative are setting the stage for beef to take a back-seat in production (for pork) for the first time since 1952. Both livestock animals have been hit hard lately with drought, high feed costs, and disease these last few years, but hog herds have rebounded sooner and circumstances have led to the breeding of more pigs and bigger animals.
The USDA estimates domestic pork output to increase 4.6% this year (to an all-time high) while at the same time cattle ranchers are still recovering from the 2012 drought that has brought cattle production into what will be a 22-year low. Just over a month ago, for the the fourth-quarter 2014, the USDA reported the breeding-sow herd posted the biggest increase since 1998 with the total hog population jumping 2% from a year earlier.
The trend for both cattle futures and hog futures are down with no clear bottom yet in sight. However, if last week’s lows hold in both feeder cattle and lean hog futures, then we can at least see some type of relief rally before another test of yesterday/today’s low.
Hog futures traded at the Chicago Mercantile Exchange have risen as high as 7.5% year-to-date, heading for the biggest gain in four years. Hog futures are currently trading at $0.9040 cents per pound, down $1.25 from yesterday’s close.
This year there have been reportedly five-million fewer hogs sent to slaughter so far, which in turn has reduced the number of whole hams sent to market. To help compensate for the reduced number of hogs (for hams), pork producers have fattened-up the animals by 17%+ to increase the size of the hams to be offered as half-hams once at the grocery stores.
The trend for hog futures is newly emerged as up. I was in-and-out of hog futures earlier today attempting to buy them on a drop in price which started earlier this week.
Hog futures spiked to their highest price in over two weeks on the signs of a reduced amount of domestic hogs being brought to slaughter. Hog futures reversed their earlier gains, only closing 7.5 points higher for the day.
USDA data revealed the number of hogs being brought to slaughter, just yesterday, had declined 1.7% from a week earlier. Also realized yesterday, hog prices for immediate delivery increased 2.6% which is the biggest gain since mid-September.
“Hog (futures) are oversold and we might see a technical rally higher without any concrete fundamental news out there,” says Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, regarding the current hog futures situation.
Hog futures trend is still technically down. I am inclined to see a little higher rally for hog futures, but view it as a selling opportunity.
I wish you a warm & wonderful Thanksgiving Day celebration tomorrow.
On signs that domestic pork demand is slowing, hog futures are down big for a second day. Hog futures (February) are currently trading at 9050 – a full $2.00 lower than yesterday’s high.
This past mid-June cash prices for hogs for immediate delivery were at a high, but since then cash hog prices have slid 20% (as of yesterday), USDA data reveals. Hog futures, however, have continued to exaggerate the June cash highs by reaching their $92.50 high just last month.
“Speculative traders bought CME December hogs with the view that the contract is undervalued based on the exchange’s soon-to-be-released hog index. The CME said it would on Tuesday issue its first lean hog index since the exchange suspended the data due to the partial US government shutdown,” said Mason Ching, Automated Trading Manager at Global Futures Exchange & Trading Company in Encino, CA, regarding the current hog futures situation. Ching added, “Hog futures also benefited from short-covering.”
The trend for hog futures is rolling over downward as of today – in my research. I will evaluate how & when to get short this market later today after the closing bell.
Hog futures are down for a third straight trading session on the outlook and concern increasing domestic pork output and supplies overshadowing pork demand here and overseas. Hog futures are down today $3.00 per CWT from their high only yesterday.
USDA data reveals meat-packers slaughtering nearly 1.3M hogs earlier this week, which is 1.5% more animals than this exact time last year. Government data also shows exporters shipping just over 3.25B pounds of pork this year (through August 31st), which is actually “down” a reported 8.6% from the same time last year – with carcass weights heavier for two months in a row.
Mason Ching, Automated Trading Manager at Global Futures Exchange & Trading Company in Encino, CA, had this to say regarding the current hog futures situation, “Weaker cash hog markets due to large hog runs have carried over to the futures, in my opinion this is due to the weather system moving across the Midwest which has allowed farmers to catch up on any delayed hog movement.”
The trend for hog futures remains up with no top yet in sight. I am still favoring the long-side of hog futures and see the market targeting the 94.50 to 94.75 area – in my work.
Hog futures spiked higher today on the outlook of improving demand for domestic pork. This speculation is said to be encouraging meat companies to purchase more hogs for slaughter.
Official data for supply, demand, and price reports from our USDA are still unavailable after two weeks because of the government shutdown, but according to an east-coast provider of agricultural news and data, it is speculated processors this week will probably handle 0.4% less hogs than last week with a foreseeable pick-up in demand.
“Hog prices should find some good support at current price levels for a little while,” said Kevin Riordan, director of research at Capital Trading Group in Chicago, regarding the current hog futures situation. Riordan added, “Demand has been on the increase and should be able to continue to absorb the recent increase in supplies.”
Hog futures trend is technically still “up,” albeit sideways for almost the last month and a half. We are long hog futures from early in today’s trading session, and came within 10 points (or “four ticks”) from realizing our initial target at 8850.
Hog futures were down big today on the outlook of both increasing domestic supplies and waning demand. Hogs were down as much as $1.50 and can’t seem to get out of congestion of the past week’s trading range.
The USDA is said to estimate meat-packers processing 428K hogs just yesterday, which is up more than 2.5% from a week earlier. Gov’t data also shows wholesale pork prices fell 1.5% yesterday – the biggest one-day drop since the end of last month.
“With a seasonal rise in supply ahead and speculative long liquidation selling picking up, in my opinion, I can see hog (futures) heading down. Also, with record open interest and overbought technical signals are seen as a bearish force,” said Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, regarding the current hog futures situation. Moreno added, “The lean hog (futures) market looks vulnerable to a significant set-back.”
The trend for hog futures remains up, albeit sideways for the past week. I am looking for a way in to the long side of this market at this time.