A sharply lower start to the morning in the hog market found good support that closed the gap left at the morning open, and briefly had the market higher for the day. However, the market found limited follow through, and hog futures were lower at the close. The hog index was down $.54 at $67.38, and projected another $1.01 lower for Thursday.
Fund length in the hog market topped out late July and was the largest since 2013, and at that time hedgers had the most pork sold in a year. Liquidation started to pick up in late August, and through last week fund length was down 29% from the July high. The chart shows both fund and hedger positions in early September for each year back to 2006. Note that funds were still holding the largest hog position since 2013, while hedger’s net short position is the largest in 3 years. The large fund position and fund selling is expected to stop rallies in the hog market, while large supplies/production will keep cash trends weaker.
