August 27, 2016

Lean Hog Commentary


More On-the-Go | Corn | Soybeans | Wheat | Live Cattle | Lean Hogs |


Posted 08/26/2016

This week's hog slaughter likely ran a bit shorter than you would think at 2.266 million head. Packing plant problems on Thursday and Friday curtailed numbers. This week's run was the second largest since February. It was only 1.9% over last year. The trade would suggest the true supply is something like 2.5% over last year.

Futures were able to rally on Friday which helped the October end 60 cents higher for the week. Cash hogs slipped a bit on Thursday and pushed to a new low for the current downtrend. Cash pork though, has now posted a full week over its low point made on Thursday. We are not sure how aggressive next week's attempt at buying will go for futures. The post-Labor Day period is generally not that a big bull one.

To be clear, we certainly do need a change in short term fundamentals right now. At this time we are just not sure how it could happen. For hedgers, we are still recommending to hold those 65.42 December hog futures hedges. All hogs to be marketed through February should be locked up. For speculative trading we would like to buy this market at some point but just can't. Let's see how the short put works out.

Working Trade:

  • (8/18) Sold December 52 put 1.92, risk to 3.97, objective 0. Closed 1.85.

 

There is a risk of loss when trading futures and options contracts.


More On-the-Go | Corn | Soybeans | Wheat | Live Cattle | Lean Hogs |


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