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By Dennis Smith | 312-242-7905  | Follow me on Twitter @denniscattle


Open interest surged higher by 2,462 contracts yesterday in lean hog futures. My guess is that yesterday’s impressive performance will be matched with another strong performance today. In the hog industry there’s two interesting things occurring. The price of feeder pigs and isowean pigs is powerful strong and sow prices are trading between $68 and $69/cwt. The top butcher hog price yesterday reached $76 ($57 live) in the carcass. So, you’re seeing sow prices bringing higher money that butcher hog prices. It appears the demand for highly processed items such as brand label bacon, sausage and pizza toppings is so strong and supplies so tight that sow processors are bidding up for breeding stock to meet demand. Cold storage comes out today at 2:00, it should be bullish. In China, live hog prices are trading around $2.35/lb compared to 58 cents in the U.S. The price of 35 lb feeder pigs in China is fetching $265 per head. And to think the USDA is trying to tell us that U.S. pork exports to China is going to slow? Highly doubtful. If April hogs happen to trade lower today, buy some calls. Look for a higher open and higher close. On the chart, a close in April above 8680 confirms a bull flag formation and signals a move in April to 9600. We are on-board.


Open interest edged upward by 777 contracts yesterday. The close, while mixed to lower in the first four contracts, was well off the session lows. Plain and simple; the show list is smaller this week, much smaller as cattle have been set back substantially and the beef is soaring, still soaring like an eagle. IMO, the acceleration upward in the cash steer market begins in earnest this week. Even after the beef tops, which some now say won’t happen until next week, packers will keep paying higher. There’s lots of margin to work with. The feeder index took a big jump but I’m told that wheat cattle will be showing up at the auction barns over the next several weeks. I’m not looking for feeders to turn real strong. I’m bullish live cattle and we executed bullish option plays yesterday in the April.

For a free 30-day trial to the evening livestock wire please send an email to: dennis.smith@archerfinancials.com

The risk of loss in trading futures and options on futures can be substantial. The author does not guarantee the accuracy of the above information, although it is believed that the sources are reliable and the information accurate. The author assumes no liability or responsibility for direct or indirect, special, consequential or incidental damages or for any other damages relating or arising out of any action taken as a result of any information or advice contained in this commentary. The author disclaims any express or implied liability or responsibility for any action taken, which is solely at the liability and responsibility of the user. This report is a solicitation. 

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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