Below is a sample of our Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!
The market is in a position to rally, but not until the poultry-domestic supply issue is resolved. Extra poultry on the US market due to the loss of export business to Russia will compete with beef and pork at the retail level and could limit any advance over the short term. If the ban continues for any significant length of time, the extra meat appearing on the domestic market will need to be discounted to get sold, and this could help drag prices lower. Russia represented 23% of the total US poultry meat export market from January through November 2009, so the loss of this market is significant. April hogs saw a minor bounce yesterday, as the market continued to recover from the extreme short-term oversold condition after the recent sharp sell-off. A jump in ham prices, which supported cutout values late Tuesday, helped to provide support. February hogs closed moderately higher on the session, with talk of more stable product values and a stiff discount of February to cash helping to support. Declining average weights in the past week and steady to $0.50 higher cash hog markets added to the more positive tone. The CME Lean Hog Index as of February 1 came in at 67.51, down 68 cents from the previous session and down from 70.17 the week before. This leaves April hogs at a slight discount to the cash market with futures normally at a premium of 400-500 points at this time of the year. The estimated hog slaughter came in at 426,000 head yesterday. This brings the total for the week so far to 1.260 million head, up from 1.187 million last week at this time but down from 1.277 million a year ago. Pork cutout values, released after the close yesterday, came in at $67.60, down $1.87 from Tuesday and down from $70.56 the previous week. Weekly average weights for the week ending January 30th came in at 268.4 pounds, down from 269.9 the previous week and down from 268.7 pounds last year. The data is supportive as lower weights could push pork production lower than expected. Traders believe the lower quality corn from the fall is the reason for the slow weight gains. Feeder pig imports from Canada for the week ending January 23 came in at 104,655 head, up from 91,801 head the previous week and compared to a 4-week moving average of 103,769. Feeder pig imports for the year have reached 0.42 million head, up 22.8% from last year.
TODAY’S GUIDANCE: Look for more long liquidation selling over the near term. April hog resistance is at 67.27 and 67.77 with 64.07 as the next downside objective.
