Lean Hog Futures Rally on Pork Price Outlook Turnaround

Leaning hog futures experienced a significant upward trend in the middle of November 2009, primarily driven by a reversal in the pork price outlook and aided by buying interests triggered by tripped stop-loss orders. This increase in buying activity on the Chicago Mercantile Exchange was accompanied by gains in pork bellies and live cattle futures. The turnaround in pork prices, particularly for retail cuts such as loins and butts, contributed to a rise in short covering and new buying interest, according to brokers and analysts. December hogs matched last week's high and closed up 145 points at 56.40 cents, its highest level since November 5.

Key Takeaways:

• Lean hog futures rallied on a turnaround in the pork price outlook, with December hogs closing up 145 points at 56.40 cents, its highest level since November 5.
• Buying interest increased after the U.S. Department of Agriculture's pork wire showed firmer indications for butts and trimmings, contributing to short covering and new buying interest.
• February hogs posted a 1 1/2-week high and closed 162 higher at 63.97 cents.
• The December/February spread occurred 5,549 times from $7.12 to $7.75, premium February.
• Bellies were higher on spill-over support from hogs, with February bellies closing 120 points higher at 88.60 cents.
• Live cattle futures ended higher, pushed by continued commodity fund-style buying of many commodities, with December live cattle closing 50 points higher at 84.07 cents a pound.
• Feeder cattle also gained on the fund-style buying, although corn prices ended nearly unchanged, with November feeder cattle closing 5 points higher at 93.15 cents.

Statistics:

• Lean hog futures closed 145 points higher in December closing at 56.40 cents.
• February hog futures posted a gain of 162 points, closing at 63.97 cents.
• February bellies closed 120 points higher at 88.60 cents.
• December live cattle futures ended 50 points higher at 84.07 cents a pound.
• December/February spread occurred 5,549 times from $7.12 to $7.75, premium February.
• November feeder cattle closed 5 points higher at 93.15 cents.
• January feeder cattle ended 40 cents higher at 92.77 cents.

Sources:

• Dow Jones Commodities News via Comtex
• Dow Jones Newswires
• Curt Thacker and Lester Aldrich (END) Dow Jones Newswires 11-17-09 1537ET
• Copyright (c) 2009 Dow Jones & Company, Inc.