Nearby December hogs closed with $.70 losses at $62.475, while back months closed stronger as funds rolled their long positions forward. It’s noteworthy in the meats that fund managers show no intent on reducing their large net long positions, even when they have to roll to higher priced back month futures.
If and when funds decide to exit net market length, a sharp price decline will follow. The risk of such a decline increases heading into late year.
The US pork cutout rose $.60/cwt on a carcass basis to with bellies rising another $1.85/cwt to $123.81. Hams were up $2.80 to $72.61 on seasonal demand for Christmas. A top in the US hog cutout should form right after the US Thanksgiving Day holiday.
The chart reflects that a bottom was scored in hogs last year at the end of 2016 on supply pressures. Those same supply risks are evident again in 2017. A more positive outlook for US pork is possible in early 2018, but not before.
