The Show List is Larger This Week

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Tuesday March 13, 2018


With the cutout up $1.45 and cash higher and not lower yesterday, Im expecting some upside recovery in lean hog futures in todays action. The trade has been pressing really hard, especially in the summer contacts. Impressively the April is gaining dramatically on the June during the Goldman Roll which ends today. Basically, this tells me that something is brewing in the cash hog market which no one really as a read on yet. Stability in the retail pork, now entering the sixth week, is bullish toward demand in the long term. News out of China regarding a drop in hog prices to four year lows should not be a surprise. They purchased U.S. technology when they bought Smithfield in 2013 and its now showing up in rising Chinese pork production. Widespread talk that Chinese pork imports from the U.S. would rise dramatically when they purchased Smithfield were painfully inaccurate. U.S. pork demand continues to rise in the absence of Chinese import demand. Thats the really good news, the bullish news for U.S. pork producers.


The final total in the negotiated trade last week was larger than I realized at over 135,000 head. The show list is larger, estimated at 230,800 compared to 226,100 last week and 217,200 last year. Numbers are higher in the south. This is just the beginning of increasing show list numbers. The weekly kill is projected to come in at 604,000 compared to 597,000 last week. Again, this is just the start of increased weekly kills. Were looking for futures to start out weak and look for last weeks lows to be taken out rather swiftly today. Our sell zone for adding to hedges starts at yesterdays high in the June contract. Most likely the market is headed lower and hedging opportunities are behind us not in front of us.

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The risk of loss in trading futures and options on futures can be substantial. The author does not guarantee the accuracy of the above information, although it is believed that the sources are reliable and the information accurate. The author assumes no liability or responsibility for direct or indirect, special, consequential or incidental damages or for any other damages relating or arising out of any action taken as a result of any information or advice contained in this commentary. The author disclaims any express or implied liability or responsibility for any action taken, which is solely at the liability and responsibility of the user. In addition, the author of this piece currently trades for his own account and may have financial interest in the following derivative products: (corn, soybeans, soybean meal, soybean oil, lean hogs, live cattle, feeder cattle).