Weekly Hog & Pork Report Trader’s Focus – For 5-27-16
This week, the June Lean Hog futures retraced only part the previous week’s downside corrections. The June Lean Hog futures will expire in June 14th so trading volume is expected to become thinner as expiration approaches. Spot Hog prices continue to be rather steeply discounted to the Nearby June contract. In recent week, we were expecting more upside price potential than what developed.
In recent letters, we have been tracking the spread Long June Lean Hogs vs. Short July Lean Hog futures to be entered at -$0.75 to -$1.25 June discount risking $0.50 from entry. Earlier this week, June Lean Hog futures went to a premium, peaking Thursday at $0.50 over only to flip
to a discount of -$0.65 by Friday’s session. Since the June Lean Hog futures will become deliverable next week, we would exit this spread next week.
WEEKLY HOGS/PORK SECTOR STATISTICS:
- This week, the F.I. Hog slaughter rate expanded to 2,181,000 head to 117.1% of year earlier; this was being compared with the Memorial Holiday
week’s reduced slaughter rate a year ago. During June, we continue anticipating some more seasonal tightening for weekly Hog slaughter rates during June. Spot Hog prices eroded this week as the Hog/Pork market is now in transitions to Post-Memorial Holiday demand.
JUNE LEAN HOG FUTURES DAILY CHART:
The June Lean Hog futures retraced part last week’s downside corrections. The June Lean Hog futures will expire June 14th, and Spot Hog prices continue to be rather steeply discounted to the Nearby June contract. We were expecting more upside price potential than what developed for Spot Hogs in recent weeks.
JULY LEAN HOG FUTURES DAILY CHART
The July Lean Hog futures made a spike low for the week during Tuesday’s session and flexed back nearly ½ of last week’s selloff.
AUGUST LEAN HOG FUTURES, DAILY BAR CHART:
The August Lean Hog futures contract found better support than seen for the June Lean Hog contract.
Mid-week, Wholesale Pork Markets continued gaining ahead of Memorial Day Holiday, but by Friday Wholesale Pork prices were softening with easing Wholesale Ribs and Ham price developing.
Mid-week the AMS/USDA Wholesale Composite Pork Carcass prices continued advancing being reported at $85.03 per cwt. compared with the previous week at $83.78 vs. a year ago at $87.30.