Lean Hog Futures Close Firm on Short Covering, Spreading, and Bargain Hunting

Strategic Insights -

Leaning hog futures closed firm on Thursday due to short covering, spreading, and deep-month speculative bargain hunting, despite initial buyer reluctance and technical resistance. The April contract closed 15 points higher at 61.62 cents a pound, while the June contract closed 40 points higher at 69.30 cents. Pork bellies, however, posted a weak settlement due to profit taking, front-month lean hog declines, and February liquidation.

Key Takeaways:

  • Lean hog futures closed firm on Thursday due to short covering, spreading, and deep-month speculative bargain hunting.
  • The April contract closed 15 points higher at 61.62 cents a pound, while the June contract closed 40 points higher at 69.30 cents.
  • Pork bellies posted a weak settlement due to profit taking, front-month lean hog declines, and February liquidation.
  • An off-floor hog trader expressed reservations about the accuracy of pork cutout price data.
  • Missouri direct and terminal hog prices came in as much as $3 per hundredweight lower Thursday.
  • Floor expectations are for generally steady, and possibly firm cash bids on Friday as some packers fill weekend slaughter schedules.
  • Market bears contend that any slowdown in hog movement can be considered bearish for cash prices and ultimately futures.

Statistics:

  • Estimated hog volume was 11,394 contracts, compared with 23,516 on Wednesday.
  • Pork bellies posted a weak settlement with an estimated volume of 238 contracts, compared with 533 on Wednesday.
  • The CME hog index slowed upward momentum, with some contracts trading in negative territory.
  • April lean hog futures closed above the middle of its trading range but below 61.97-cent 10-day and 62.01-cent 20-day moving average resistance.
  • June lean hog futures closed near a session high above 69.28-cent 10-day moving average and above 69.14-cent 20-day moving average support.

Sources:

  • Dow Jones Commodities News via Comtex
  • Theopolis Waters, Dow Jones Newswires; 312-715-6279; theopolis.waters@dowjones.com
  • Comtex SmarTrend(SM) Alert, an automated pattern recognition system, indicated an UPTREND on 12-22-2005 for CME @ $375.76.