MURICO.com Forum

Re: DH, the Expansion Phase-----

has definitely kicked in and getting help from cheap corn. I'm not sure how wise it is to read too much into what USDA numbers say, since they have a strong addiction to change those numbers down the road. Not that they do it deliberately but when the next set of numbers come out that don't validate the last set of numbers, they have to make changes and use the guessing method to those changes. The bottom line is, those numbers always seem to get changes and the market acts accordingly. This is why the hog market or any market has retracements of the up or down move. We make our guesses for those retracements but if the USDA is confronted with an error when the trade is focused on the last set of numbers, our trades become very wrong-very quickly. I for one know the USDA will continue in their error prone ways.

I talk to only a small % of producers but a few of them are involved closely with leadership people in the hog industry and they tell me from what they see and hear there has not been a real noticeable expansion effort. There take on the situation is that the problems with PED caused greater than normal culling which showed up in previous reports. Now those culls are just being replaced which bumps the sow numbers up showing an increase which the trade over reads into calling it BIG EXPANSION, but the truth of the matter is that production and sow numbers are only back to the high end of the last 5 years but not expansively greater. The consensus from most is that the loss of DEMAND from the port strikes is the culprit. The port strikes will end and when they do, my guess is we will see a sizable round of profit taking which may catch a number of short positions with there pants down.

Supply and Demand will rebalance in a new trading range causing some sort of retracement with seasonal demand coming soon. The demand loss created from the port strikes may not be gotten back quickly or easily which will put a lid on how much retracement rally we get for the seasonals. Also in the equation is new health issues cutting into production and maybe some cutting of the sow numbers or new errors arising from future USDA math computation. The Expansion Phase of the hog cycle usually take 3 years to find the bottom, so we still have a lot of time left for up and down movement on the hog charts with a VERY WIDE range to play in during the next 3 years. A 50% retracement rally is a common occurrence on the hog market menu as common as hamburgers and French fries on the public menu. A $30-$35 retracement rally can begin at any time and take 7-9 months to play out and still keep the hog market in a downtrend to seek another selloff low to fulfill the 9 year hog cycle low due in the 2017-2018 time frame.

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The "Hog Cycle" and the MMMs. - - -
Re: DH, the Expansion Phase-----
It seems to me, ITZ, that cheap - - -