Hog futures were steady at Tuesday’s open, and finished from steady in October to as much as $1.675 higher in December. The hog index continues to work lower and was down $1.27 at $62.80 and projected $.95 lower for Wednesday, while the cutout was down $1.77 at a 5 month low of $76.32.
The pork belly value has pushed under $100 this week and also broke under trend line support. The next target is at last year’s seasonal low near $80. The September Cold Storage Report will be released Thursday afternoon, and is expected to show an increase in belly stocks from last month, though supplies are likely to remain well under a year ago. Following this year’s rally to record prices (with record production), we suspect that end users will use this break to book bellies as far forward as possible.
December hogs look to be aiming for a small chart gap left 2 weeks ago at $59.825-59.90. Major moving averages are scattered from $60.50-62, and our view is bearish on this rally. We doubt that the CME has traded seasonal lows.
