Despite energy and gold dominating the news wires recently, lean hog futures are the one commodity that has actually fallen MORE than crude oil. Lean hog futures are actually up 40 points at the Chicago Mercantile Exchange (as of this writing), but in the overall scheme of things the hog market has actually plummeted over 51% since the end of last June.
“Lean hog” (futures) – the market-term designating butchered pigs regardless of size – have only sunk in price after reaching record highs last summer after a terrible disease decimated supplies. Thankfully to the credit of resourceful pig farmers, once the virus ran its course more hogs made it to the market and the USDA projects a 5.5% rise in pork production this year at a time of slowing int’l demand.
Kevin Riordan, director of research at Capital Trading Group in Chicago, shared his fundamental analysis insight regarding the current hog futures situation by stating, “As fast as the hog futures were rising with the wrath of last year’s virus, hog prices are coming down twice as fast due to a combination increased supply and lessor demand.”
The trend for hog futures is down with no clear bottom yet in sight. All lean hog rallies should be viewed as opportunities to get in on the short side – which is where I’m at.
ALL COMMENTARY IS CONSIDERED OPINION & VIEWS FROM THE AUTHOR AND NOT A SOLICITATION OF ANY SECURITIES. THE RISK OF LOSS IN TRADING COMMODITY INTERESTS CAN BE SUBSTANTIAL. YOU SHOULD THEREFORE CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR FINANCIAL CONDITION.