The monthly Hogs and Pigs will be out Friday. There are few arguments on breeding herd numbers, which suggest a 2.7% drop since last year. The main question is what about hogs currently on the ground getting fed. The average guess suggests the marketing herd is 2.5% larger. Going into this report, Allendale is the low estimate suggesting it will be only .9% larger. Our number assumes hog slaughter will run around 4% higher in October then dwindle to 1% higher by December and then equal last year by January. It would appear the average trade guess suggests we will fall below last year at around February or March instead. With such an important supply report up ahead we look for little trading action in the next two days. For trading we feel the highest probability trade is collecting option premium.
Lean Hog Technical Commentary: The trend is down, but may be turning to sideways.
Vital Technical Indicator: Next projected major turn day for lean hogs is
October 14.
Trade Idea(s): Stand aside in futures.
Option Strategy(s): Sold 1 December $72 call at $2.20. Settled at $1.52 on Wednesday.
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