Will Traders Go ?Hog Wild? Following USDA Report?
Today’s Spotlight Market
The following are the average ?trade? estimates for this afternoon?s USDA Quarterly Hogs and Pigs Report due out at 2 pm Chicago time.
All Hogs and Pigs on Sep 1:?? 96.5% of year-ago totals
Hogs kept for breeding:????????? 101.5% of year-ago totals
Hogs kept for marketing:??????? 96.3% of year-ago totals
Fundamentals
Lean Hog futures prices remain at historically high price levels despite seasonal tendencies that favor lower pork prices. Pork cut-out values have seen gains the past week, despite the end of the summer grilling season. Near-term supply tightness appears to be responsible for the price increases, which are helping to keep packer profit margins in the black. Hog slaughter projections are expected to rise to near 420,000 head, which is above 411,000 head seen one week ago. Increased packer demand for market ready hogs is helping to raise cash market prices, with the CME 2-day Lean Hog index up over 3.00 to 105.30. Livestock traders will be busy squaring their positions this morning ahead of the widely watched USDA quarterly Hogs and Pigs report. This quarter?s report will is seen as especially important to get a sense of producer?s intentions to increase the breeding herd following the devastating outbreak of PED virus, which greatly reduced the young pig population this year. While traders expect producers to increase the number of Hogs used for breeding, any major differences from average estimates could spark increased volatility in the 2015 futures months.? ?
Technical Notes? -? View Today’s Chart
Looking at the daily chart for December Lean Hogs, we notice prices beginning to consolidate following a rather significant sell-off from late July into the middle of August. Bulls still have a slight edge as prices remain above the 200-day moving average. However, the 14-day RSI remains in neutral territory with a current reading of 44.15. 99.000 is seen as the next major resistance level for the December futures, with support found at the September 18th ?spike? low of 90.900.
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