AgriVisor Hog Commentary

Tuesday, December 22, 2015

***** Cash Analysis: The cold storage numbers out today have some slightly positive overtones for hogs, especially the strong movement of hams out of freezers.  But the report will be overshadowed by tomorrow’s quarterly hog report.  The trade is looking for the breeding herd to be about 1% higher than last year, with the market inventory 1.5% higher than a year ago.  But given the collapse in hog and cattle futures this fall/winter, the farrowing numbers may be even more important.  The fall pig crop is thought to have been 0.3% lower than last year.  But the Dec/Feb farrowings are also expected to be down 0.4%, with the summer farrowings up 0.5%.  Those might overshadow the rest of the report with the large meat supplies the industry is working through.  Meanwhile, the slaughter interruption the next couple of weeks could continue to keep a lid on cash prices.  Traditionally, the first week of the new year is little better with producers catching up on movement, unless weather plays a part in the mix.  But unless the report contains some unexpected negatives, the market should be poised to begin its turn up.  Strength in cattle help that argument as well.

***** Tech Comment: There’s still not much to say about hog futures.  Feb. continues to have inside trading days, but the lack of downside energy help build the case the recent break has been a retest of the mid-Nov. low.  Still, look for it to struggle as it gets to $60.00 with nearby futures struggling with that the last few weeks, along with Feb futures.  But the low $50s low on nearby futures, and the $53.97 low on Feb. are looking like potential good supports.  More distant months act much like the February contract, but have a slightly more positive bias.  From a larger perspective, both the cash and futures could be positioned to put seasonal lows in at any time.

***** Live/wholesale prices:  Western Corn Belt cash hogs, $48.64, -0.86, #2 Pork Cutout $71.40, -0.41.

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