In the big picture for lean hogs, though liquidation has picked up it still is not yet severe. Averaged out, the four-week average sow slaughter, using the latest data available, is up 8%. Our main target was to see it hit 10% and stay there for two months. Assuming liquidation is now happening in March, you are looking at next February before pork production will be affected. With that in mind we are not sure why the October and December were favored in last week's futures rally. If you want to be bullish hogs then play it safe and buy the 2009 contracts. We still suggest these 2008 contracts, as they each get closer to their respective expirations, will come to reality and move lower. Until those expirations get near though, it is likely we will see bulls try to keep premiums to 2007 prices as they argue exports will save the day. Last week after the Hogs and Pigs report futures prices fell to near our projected prices. We will leave in the orders we placed to take profits if prices move to discounts of those projected prices. The main message is keep calm here and stick with your plan.
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