Feb hogs ended another $1.70 lower, though amid limited fresh news. Recent weakness is understandable given animal numbers and production, but it’s just as much about the liquidation of speculative length. ARC detailed on Wednesday that while a sizeable long position is justifiable, managed funds’ current long is a bit excessive. There’s risk that another 5-7,000 contracts is liquidated in the next few days.
Final weekly slaughter in the last week of 2017 totaled 209,000 head, vs. an estimated 210,000 and vs. 216,000 head a year ago. Official pork production totaled 445.7 Mil Lbs, vs. 453 a year ago, and this afternoon’s slaughter data is mildly supportive. Weekly export sales also improved to 12,600 MTs, vs. 5,300 the week prior. Key on Friday is whether Feb’s 20-day moving average ($70.20) holds. If not a test of $68-69 lies ahead. We maintain moderate rallies are selling opportunities.
