Current Marketing Thoughts
Kevin Van Trump has over 20 years of experience in the grain and livestock industry.
Why Am I Long the Hog Market???
Oct 16, 2012
Q. Why Am I Long The Hog Market???
A. I felt there was real value in being long the hog market, especially the deferred contracts at prices at or below 80. The April contract was below 80 for only a brief period of time back in May, while the Feb contract was under 80 just a couple of weeks ago. While US pork supplies may seem fairly abundant there are actually several bullish cards now in the deck that will actually drive prices higher as we move into 2013. Obviously the higher grain prices have forced some global liquidation of supplies. Even though US liquidation has not been significant we do believe liquidation in other countries may soon become a much larger problem. If you remember back to the past couple of times grain prices surged higher demand for US pork also surged higher. Not only are we thinking demand from China will pick up but so will demand from Mexico, Russia and other US importers. Making the US market even more enticing to me is the fact that we are seeing some significant liquidation in Canada and some changes that could really damper European exports, who are one of our main competitors for pork heading into China and Russia. With out diving to deep into the wood pile, I am being told the EU Commission will soon implement a union wide sow-stall ban on (supposedly as early as January 1st, 2013). Thoughts are this could cause a 3-7% decline in European pork production, which would be equal to about 2-3 billion pounds of pork (basically 1/2 of the entire US exports last year). Moral of the story...not only is Asian demand pushing higher and higher, but some of our larger competitors and global suppliers might not have as much available supply to offer, essentially making US pork even more attractive. I am not sure about the day-to-day swings, but I like the thought of owning hogs into the spring and early summer of 2013.
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