Hogs were under pressure right from the open on Wednesday, and remained weak into late in the day with February marking the largest decline of just over $1.
After falling back under last year’s seasonal low in late September, the pork belly value has turned higher over the last several weeks. Wednesday quoted price of $118.37 was up $4 from last week and $29 over the September low. With the market now turning higher, there is not too many technical targets to choose from on the chart. Note that a year ago, confirmation of a seasonal low was followed by a more than $80 rally that lasted into early February. Supply has been large on big hog kills, and stocks have inched higher in the last several months, but upcoming Cold Storage reports will be watched closely to confirm if demand this year is as strong as in 2016.
The first level of support in February is at the old high near $69, followed by major moving averages that sit just above $66. We hold to a view of selling strong rallies.