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Lean Hog Commentary
This week was supposed to be the week that cash hogs bottomed. We had discussed a Monday - Wednesday time frame previously but losses were seen all week. The closely followed Iowa/Minnesota was 2.77 lower for the week. More than adequate supplies on the US, concerns over exports to Mexico later this summer, and a slack retail demand vs. beef were all issues. On the bright spot, with today's gains for wholesale pork, that end closed up 89 cents for the week. This could be the first sign of a bottom. Let's see the demand next week when May grilling season procurement gets a little more market talk than previously.
We would not suggest the 2.287 million head slaughter will help us out too much. That was USDA's estimate on Friday. It was over our 2.276 number discussed in the morning commentary. As last week and this week were affected by the Easter holiday, and last year saw Easter in March. A year to year comparison is not applicable. What will be applicable will be the kill rates over the next eight weeks. We are looking at the next leg down in supply.
Funds have been hitting the hogs hard. Today's CFTC report showed their selling in hog futures is now five weeks in a row. The latest numbers cover activity from April 12 - 18 (Tuesday). They sold 6,440 contracts in that period to bring their current position down to a net long of 18,180. It was just as recent as February they were net long by 60,298. Today's net position is the lowest they have been since December 29, 2015. You read that right.
$77 is our upside target for June futures. Let's wait until the market is ready for a turnaround before discussing the upside in speculative trades right now. RN
- (4/19) Stand aside