Are Bulls Still In ?Hog Heaven??

Today’s Spotlight Market
Large and small speculators have a difference of opinion as to the direction of the Lean Hog futures market, at least according to the Commitment of Traders report. For the reporting period ending July 1st, non-commercial traders (large speculators and funds) added 1,313 new net-long positions for a cumulative total of 83,480 contracts. However, non-reportable traders (small speculators) continue to try to pick a top in this bull market by adding an additional 1,028 new net-short positions which now total 7,802 contracts. Commercial traders are net-short 75,678 contracts as of July 1st. ?

 

Fundamentals
Lean Hog bulls are starting to get nervous as this historic bull market approaches 1 year. Seasonal demand tends to turn lower going into August following an up-tick in demand for the Independence Day Holiday. An expected decline in pork production and slower cash Hog sales triggered a bout of profit-taking selling earlier in the week, although buyers re-emerged on Wednesday as pork cutout values made a new all time high. Analysts expect market ready Hog supplies to remain tight going into late Summer which may lend support for the October futures, which are currently trading at? a wider than average discount to the CME 2-day Lean Hog Index. Traders will also keep a close eye on U.S. pork exports in the coming months for any effects of record high prices for foreign purchases, especially to China, where monthly export totals have declined of late.? ?

 

Technical Notes? -? View Today’s Chart
Looking at the weekly chart for October Lean Hogs, we note how few ?down? weeks we have had since the beginning of February when the bull market really started its upward momentum. Prices are sharply lower for the week despite a move to new contract highs on Monday. The 14-week RSI is showing a bearish divergence despite remaining at overbought levels. With Live Cattle moving limit down on Wednesday, due to traders fearing that beef demand will suffer due to record high prices. We may also see this same scenario occur in the Lean Hog market, especially if large speculators begin to lighten their large net-long position. Contract highs of 118.350 should act as resistance for the October contract, with support seen at 105.825.

FridayJUL11

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