Hog Futures Extend Rally on Value Outlook

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.

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