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Hog Futures Ready to Rip


June hogs closed on the highs of the week Friday. This market looks ready to go. A close over 10600 will signal a move to the highs. The fund liquidation is complete. The COT report showed the funds net sellers of 6,000 contracts leaving them net long 86.6k. Cash is called fully steady to begin the week. The weekly kill was up 1.4% from last year. Both cash and cutout are trading well above year ago levels. Cash hog prices are up 34% from this time last year and the hog carcass is up 26%. Y-T-D kill is up less than 1%. The demand curve for pork has shifted, it’s increased. We first identified this in early Feb and we’ve been onboard ever since. Open interest in hogs was up 3,902 with open interest rising on every hog contract. Look for upside follow through today. Hold all bullish positions.


pigs eating in pens


Placements were 4% smaller than expected by the trade at just 88% of last year. Marketings were 2% smaller than expected at 86%. However, net placements were smaller than marketings, meaning that we have fewer cattle on feed Apr 1 than on Mar 1. Because of two fewer weekdays, the actual marketing number is 95% when comparing on a daily basis. THE REPORT IS BULLISH!!! I’m not sure what the 5-area average cash price will be for last week, but it should be around $1.82-$1.83. Both Oct and Dec LC futures are priced well below the cash. These contracts are grossly undervalued, IMO. In addition, the industry has GRASS FEVER.  This means that many cattle will be turned out on grass for lower cost of gain. In other words, Apr placements are likely to be lower as well. Math is changing quickly. Cash steers traded from 180-183 in the south on Friday and from 181-184 in the north. Dressed trade in IA occurred from $292-$293. Seasonal demand is necessary to sponsor and support a major rally. But the deferred contracts should lead the way today. I expect our buy stop orders (18190 in Dec) to get triggered today. Look for a firm to higher open in Jun and Aug and sharply higher in Oct and Dec. All contracts, including feeders look poised to gap higher.

  • Working orders buying Dec LC at 18190 stop.


Soybeans scored a double bottom on Friday. Wheat is trying to penetrate resistance defined at Friday’s highs. Bean oil is expected to recover off recent lows. I’m told that wheat prices may be responding to dry weather in Russia. For corn and soy, this is not the time of year for prices to move lower. Typically, they move higher into May/Jun off uncertainty surrounding the upcoming growing season. Rain, beneficial rain is headed for the driest parts of the Corn Belt. While I consider the long-term fundamentals bearish, in the short term I’m expecting a rally. We bought Jun soy 1170 calls on Friday.


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



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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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