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Lean Hogs Futures Analysis

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Lean Hogs Futures

Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Van Commodities, Inc. Research Department. Please view our Risk Disclaimer.   

Free in-depth analysis of the Lean Hogs futures market written by a professional Lean Hogs trader.

January 01, 2015

Lean Hog Broker, Van Commodities, Inc. 

At the close of 2013 on December 30, 2013 the February 2015 Lean Hog futures (HEG15), which is presently the front month contract at the Chicago Mercantile Exchange (CME), closed at 80.60. The contract at the time was a back month contract, but nonetheless rallied to an intraday high of 100.00 on July 22, 2014 along with the rest of the Lean Hog market. The contract’s twenty four percent move was prompted by concerns due to the Porcine Epidemic Diarrhea Virus (PEDV) and the resulting high death rate for the Hog herd. Throughout the year the industry was able to offset a percentage of the hog death rate by increasing weights, on the back of relatively low feed prices. Over the past nine months the industry has been able to grow the herd as reported in the most recent Hog and Pig Report on December 23, 2013.

Since November 14, 2014, when HEG15 hit an intraday high of 93.125, the contract dropped close to sixteen percent on December23, 2014 trading at an intraday low of 78.675. Based on several momentum studies in both short and intermediate term time frames , HEG15 became oversold on the twenty-three trading day selloff. During the move down a large amount of long speculative positons were closed out. Market participants have to wonder whether the selloff discounted the marginally bearish cold storage and Hog and Pig report December 22 and 23 respectively. HEG15 has worked of some of the oversold condition and the contract may be vulnerable to another push down over the near term, but the downside appears to be limited. With the potential for cold weather and nervousness over the possibility of an increase in PEDV as we move into the depth of winter the Lean Hog futures appear to be close to a tradable bottom.

If HEG15 pushes down for a retest of the lows there should be initial support between 77.25-79.00 and stronger support at 74.50-76.00.

 

March 14, 2013

Lean Hog Trader, Van Commodities, Inc.

The April Lean Hog future (HEJ13) bounced off lows hit on March 06 when the contract was down roughly sixteen percent from the intraday 92.825 high on November 21 2012. Slowed export sales and tepid domestic pork demand, resulting in weak wholesale pork prices, has undermined the futures contract over the past several months.

HEJ13 scored oversold levels on several momentum studies on both short and intermediate term time frames on March 06 at 78.25. Short term momentum indicators are working off the oversold condition, but intermediate term indicators are still oversold and have turned up. The trend for HEJ13 still appears to be down, but the contract may range trade for awhile before resuming further downside action. Initial resistance may come in at 82.50-83.80 and stronger selling at 85.00-86.40. In the near term initial support may come in at 78.25- 79.25. Over the longer term HEJ13 may find solid support at 74.00-76.55.

February 10, 2013

Lean Hog Futures Trader, Van Commodities, Inc.

The Lean Hog future (HEJ13) closed Friday at the low end of its daily and weekly range.   Several concerns continue to undermine the price of HEJ13 including; weak pork prices, poor packer margins, larger supplies of slaughter ready hogs-relative to forecasts earlier in the fall, and ongoing anxiety about Russian pork demand from the US.

 

HEJ13 is oversold based on several momentum indicators on both short and intermediate time frames. The contract appears to have further downside potential over the intermediate term, but the contract may catch a bounce in the near term. Initial resistance may come in at 87.20-87.60 with stronger selling at 88.10-88.50. The contract may find support over the intermediate term for a tradable bounce at 83.00-84.75.

December 19, 2012

Lean Hog Broker, Van Commodities, Inc.

The February Lean Hog futures contract (HEG13) closed up $1.20 today. Traders added a weather premium with ideas of very little hog movement due to a blizzard warning over the next twenty four hours and the potential for a second snowstorm within the next ten days. Traders will start to set up Thursday for the Cold Storage report Friday afternoon.

 

Short term momentum studies would be supportive of higher prices for HEG13. Over the near term we may find resistance for HEG13 at 87.00-88.00 and support at 85.00-85.75.

 

Lean Hog Futures Trader, November 29, 2012

Lean Hog futures basis the December contract (HEZ12) has traded up about twenty-one percent since hitting a low of 70.05 September 07, 2012. Today’s close at 83.75 may be getting close to an area where a pullback could be expected.

Short term momentum studies are registering a strongly overbought condition and a couple of intermediate term studies are moving into an overbought situation. Initial resistance should appear around 83.90-85.00 and if the market is not turned back there, further selling pressure should appear at 87.00-88.00. Initial support in the near term may be found at 81.05-82.00 and then 78.50-79.10.

Lean Hog Futures Broker, May 3, 2012

Although it is hard at this point to become too bullish on the CME lean hog futures market based on the fundamentals, it does appear from a technical perspective that lean hog futures, basis the June contract (LHM12), may be ready for a tradable rally. Wholesale pork prices have improved somewhat over the last few days and although packer margins remain in the red they have improved recently. LHM12 hit a targeted level for some technicians around the 84.50 level and it would not be surprising to get a short covering rally going into the late spring early summer barbequing period.

LHM12 is oversold based on several momentum indicators and has achieved a downside target in the 84.50 area. Open interest is relatively high and a move up may lead weak shorts to cover their positions. If LHM12 can hold above the 83.00 to 84.50 level, a move up may find initial resistance around 88.45 with more significant resistance around 90.50

Lean Hog Trader, Van Commodites, Inc. - April 17, 2012 

Although the fundamental news for the lean hog futures basis the May contract LHK12 remain somewhat negative the contract came to life today scoring a reversal day to the upside. Trade was slow in the cash markets with limited buying interest from commercial, and noncommercial traders.

Since the late October 20011 highs and the February 22, 2012 secondary highs LHK12 has lost roughly 12 percent of its value. The market is oversold based on several momentum studies and the market may have found some short term support in the 87.00 area. Initial resistance should come in around 90.00-90.50 and then 92.00. If LHK12 is able to overcome resistance in the 94.00 area, we would reappraise our view of the lean hog market.

Commodity trading is not suitable for everyone. The risk of loss in trading can be substantial. This material has been prepared by a sales or trading employee or agent of Van Commodities, Inc. and is, or is in the nature of, a solicitation. This material is not a research report prepared by Van Commodities, Inc. Research Department. Please view our Risk Disclaimer.

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