Pork Prices Plunge
Today’s Spotlight Market
U.S. Pork production is expected to reach record levels in 2015, as U.S. consumers now prefer the ?other white meat? over beef for the first time in over 60 years. Most of the U.S. Pork production will be consumed here in the U.S., as a strong U.S. Dollar may hamper exports as non-U.S. buyers may ?squeal? at the cost of U.S. Pork products.
Fundamentals
Consumers should get ready to stock their freezers with ham and bacon soon, as a sharp increase in Hog production, mainly due to cheap feed prices, should help to keep wholesale pork prices on the defensive. Front month futures continue to trade near 4-year lows following cash market prices, which continue to trend lower due to lackluster exports and moderate retail demand. The recent snow storm that moved through the heart of the U.S. has caused packer demand to wane the past several days, which has kept market-ready Hog demand low and cash prices weak. On the product side, pork cut-out values continue to slide, reaching their lowest levels since the end of the 3rd quarter of 2012. Ironically, this was the same time period where Lean Hog futures prices made their last major low, which ultimately cumulated in prices nearly doubling in a 2-year time span. While we must exclaim that past performance is not a predictor of future results, we would be remiss not to note that Ground Hogs Day was just this past Monday?. ?
Technical Notes? -? View Today’s Chart
Looking at the daily chart for April Lean Hogs, we notice prices continuing to make new contract lows, as previous support at 70.000 has given way. Prices are starting to pull away from the 20-day moving average, as price weakness appears to be accelerating. The 14-day RSI has moved back into oversold territory, with a current reading of 26.37. One has to go back to the November 2010 lows of 65.15 to find the next support level for the April futures, with resistance seen at the January 29 high of 75.325.?
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