Cash will be called lower and likely lower for the rest of the week as packers take full advantage of the backed up hog situation. For five consecutive weeks the weather has disrupted movement of hogs. Yesterdays kill was a glaring 109,000 head lower than the kill from Monday of last week. So margins improved yesterday as packers lowered cash bids and product actually had a nice jump. Over the last several weeks the cutout has been quoted higher at noon only to fail to hold the strength. So yesterdays higher closing pork report was a refreshing change. The bearish trade is embolden as theyve been correct and they have all the positive open trade equity. Yesterdays volume was 61,000 and open interest increased in every hog contract with the total OI rising by 4,200. At the moment theres not much one can say thats bullish. We now need three things to develop. We need improved weather so hogs can move freely. We need to get the backlogged animals dead and gone. And we need to see some demand, some real demand show up for pork that is trading at ten-year lows. Look for a lower early trade.
DH, Dennis is still Bullish but has been stopped out and has not gotten back in. This is really a difficult market to trade. We all know China will buy a ton of pork some day, but When? As always it is the timing that kills us, not our knowledge of the fundamentals! This trade is by far the worst one ever for me! However it still could be my Best!