Lean Hog Futures—Hog futures in the February contract is trading sharply lower for the 4th consecutive session down another 172 points at 70.27 continuing its bearish momentum.
If you have been following any of my previous blogs you understand that I thought the price gap that was created on September 12th at 68.52 will be filled and then I will possibly be looking at a counter-trend trade, however be patient as this market still remains weak. The next level of support is around the 65/66 level as the volatility remains extremely high and I don’t think that situation is going to end anytime soon.
Cattle prices are much stronger and are right near a multi-month high, but hog prices continually go down as U.S supplies are very large despite the fact that China has killed 250 million hogs due to the swine flu as I think eventually demand will pick up for this market and send prices higher, but at the current time picking the bottom is very difficult.
Hog prices are trading under their 20 and 100 day moving average as this trend remains negative, but it really has been extremely choppy over the last several months as I think we are in a bottoming out pattern so wait for the price gap to be filled before looking at any type of bullish position.
CHART STRUCTURE: POOR
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