Outside Markets: Outside markets are “steady” this morning, which now days just means not limit up or down. The “steady” trade is helping offer support to the agricultural markets in the overnight/early morning trade, the early indication is that will spill into a positive livestock open, but that can change quickly, so don’t take it to the bank.
How can you rationalize the moves that we have seen over the last two weeks? Simple answer, you can’t. I usually don’t like to rag on market conditions but the only way to explain it is, stupid. I doubt we are alone when we say cattle are extremely cheap here, but that doesn’t mean you need to load the boat and get in without a plan. The concern is packing plants ratcheting back capacity. Is it going to happen? I don’t know, but you can’t ignore the possibility. We have been looking to the options market to get good longer-term exposure, allowing us to mentally and financially weather the insane intraday swings. Sure, options are expensive, but there are spreads to utilize that help lower the cost while keeping good upside exposure.
June lean hogs made new lows yesterday but managed to close in the middle of the very recent range. As of writing this, it looks like we will see a firm open in hogs, but that can change quickly. Technicals remain fairly useless, hopefully we can see a few consecutive days of normal price action to let them recalibrate. If you want to play for a recovery in commodities, we think there is better opportunity than hogs.
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