Sep 2, 2014
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The Lean Hog Perspective

RSS By: Jeremy Knutson

This lean hog and feed commentary contains thoughts from Jeremy Knutson, a commodity broker with Hurley & Associates.

Hog & Corn Comments – 11/02/11 Beginning of the end for lean hogs?

Nov 02, 2011

 

Hog & Corn Comments – 11/02/11 Beginning of the end for lean hogs?

Corn – Dec ’11 corn backed off today but not really to much surprise.  The market made just over a 62% retracemement of yesterday’s range and firmed going into the close.  I’m of the opinion that we could see additional buying come into the market tomorrow.  The corn market has an immediate target of $6.65 and then up to the $6.77.  If $6.65 is breached to the upside there should be a considerable amount of buy stops above this level which should give the market a little pop above $6.65.

I’m thinking that we should see small follow through selling early tonight and then find a bottom prior to the 6:00 a.m. CST close.  Speak with your risk manager about covering corn feed needs for the future if you haven’t already.  This break in price has a blessing and needs to be taken advantage of in some form.  Visit with a or your risk manager for the best solution for your situation.

Bottom Line – I’m looking for an early low and late high tomorrow.

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Meal – Dec ’11 meal has been lagging the last couple of weeks and giving end users nothing but time to make purchasing decisions.  The same goes for meal as it does for corn, make sure you visit with your risk manager and get your needs calculated and covered.  I’m expecting the Dec ’11 meal futures to make a run back toward the $335 area over the coming weeks unless the outside markets provide us with extremely negative news.  Outside markets aside, I see meal showing signs of support at current levels.

Bottom Line – I’m looking for an early low tomorrow.

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Hogs – Feb ’12 hogs retreated some today.  The market has been resilient over the past few days.  In my opinion the Feb ’12 futures are just about ready to make a slide lower and try to test  $88.35 and then all the way down to $86.50 and last but not least, $85.00.  I’m hearing rumblings of more available pigs coming to market between now and the new year.  Packers have good margin but if they also have good supply they are not going to want to pay up for open market hogs either. 

The prudent thing to do would be stay current with your cash marketing’s and make sure that you don’t get caught at the mercy of the packers when the leverage slides back their way.  We have been using Twitter as a tool to share negotiated cash hog information since April 2011 and it has been working well.  We still need more participants to build our network and provide more valuable information to producers that sell open market pigs or are thinking about getting into the negotiated market to some degree.

There is a lot of work to be done in getting more negotiated hogs into the mix of our daily slaughter.  Industry experts suggest that we need 10% of the daily slaughter to have fair price discovery and we are currently running below 5% on most days!  If there are not enough negotiated pigs in the future then new packer contracts will more than likely be based off of the product and what cutout does.  The hog producers would be hurt by a move like this because there would be absolutely no control over their marketing’s.  Export business DOES NOT show up in our cutout reports.

If you are interested in what goes out on Twitter just visit www.markethogs.com which will bring you to my twitter page and you can see what is posted.  We have producers setup so these messages go directly to their cell phones in the form of a text message to keep producers as up to date as possible on cash news. 

Producer hog margins are still very good at the moment but don’t expect them to last forever.  If you haven’t made any moves in the market please review your situation and visit with your risk manager about a plan!!  If you have been caught in the MF Global debacle and need help with your account and are looking for a place to call home you can give our office a call as we would be glad to help.  Our toll-free number is 1-877-212-2564.

Bottom Line – I’m looking for an early high in the Feb ’12 hog contract for tomorrow.


Hurley & Associates believes positions are unique to each person’s risk bearing ability; marketing strategy; and crop conditions, therefore we give no blanket recommendations. The risk of loss in trading commodities can be substantial, therefore, carefully consider whether such trading is suitable for you in light of your financial condition. NFA Rules require us to advise you that past performance is not indicative of future results, and there is no guarantee that your trading experience will be similar to the past performance.

 
 
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