LEAN HOGS

Lean hog futures closed higher on Wednesday with some improvement in the bull spreads noted. Open interest was down by 1,800 cars on the wed trade. Open interest has been leaving the hog market recently, on both down days and up days. Another higher close in the June will give the market the look of a seasonal low. Hogs can get exciting at this time of year and with the Chinese in the export market, we’re bullish from a fundamental perspective. Weights have stabilized and the weather pattern for seasonal demand in the states has improved dramatically. The pork cutout surged higher yesterday, quoted at $85.03, marking a new recent high and the highest pork carcass quoted since Oct 26th, thus, a seven month high. Finally, the impressive recovery in crude oil is bullish toward pork. So many of our smaller export customer’s economies are very dependent upon crude oil revenues. The most notable would be Russia which currently is not an export customer. Vastly increased oil revenue could bring the Russians back to the EC pork market. This is pure speculation on my part. If it occurred, however, it would be very bullish. We own a host of June calls. Weekly pork exports were sluggish and not bullish.

I am flat the market today and have no orders in!
Dewey