We have taken some heat on our stance that liquidation is not happening. Just like you we hear every day from customers that sow killers are being backed up, or sow prices plummeting, or of a neighbor who is telling the local plant to come get all the sows.
We are hearing this just like you. However, this type of disconnect, between what "the talk" is and what is actually happening is very common, especially during key phases of expansion or contraction. The only thing we have learned to look at is what the facts are in the national picture. The facts continue to show sow slaughter (recently BELOW last year's levels) is nowhere the needed 10% and higher level. At a minimum we should be 5% higher. What this tells us is if sow killers are rumbling now they will be squealing when liquidation truly happens. It will come but we cannot say it is here yet.
Short Term Pricing: Bulls are in control as cold temps are keeping the hog barns closed and packers reaching for hogs and the "pork to China" talk continues. It will likely continue for a few more days. For now we will be happy getting some hedge sales done for summer marketing's. There is more upside coming and we will slowly wrap up marketing’s in the coming days/weeks. Also, look at that February 2009 contract. It is priced at almost $82!?! This market is offering some opportunities. We will be patient but will get work done on the "pork to China" talk. On the speculative trading end April futures broke out of their $62 to $64 sideways range. Do not get long term bullish on these futures. This market will get out of reason on the upside then will get back to reality.
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