LEAN HOGS

Dec hogs are higher today in the early action with the bull spread also tacking on some gains. Cash hog prices, yesterday, were down .50 on very light hog receipts. Next week will be a disrupted kill week. The week following, the first full week after Thanksgiving will likely be the peak slaughter and peak production week of the season. Cash hog prices, hovering just above $55.00, are substantially below their 3-year average for this date, or $82.00. It’s still our opinion, from a purely fundamental standpoint, that lean hog prices and futures are undervalued. Weekly exports showed pork export sales up 56% from the 4-week average. It’s also noteworthy that China was the second largest buyer of U.S. pork, behind Japan. Pork shipments last week were up 2% from the 4-week average. The Chinese, as well as our other export customers likely know a bargain when they see one. Look for pork exports to flourish in the weeks ahead. Technically, hogs need to walk before they can run. We need to see a close above last week’s high, or 5712, before we’ll start feeling better about this market.