Good afternoon hog traders,
We wanted to shoot everyone a comment after the WASDE report today in regards to hogs. We had a good week of trading if you joined us in the markets. The roll forward from April-June to Feb-Apr was our best decision early in the week. We rolled from the April-June when it was at -8.75 to the Feb-April when it was around -4.15, the former ended the week down at -9.45 while the latter traded into its weekly highs on the close at -2.62. We look for more upside action in the Feb-April going forward, last year the Feb went to a premium over April. We think that could happen again but don’t expect us to hold for that long. We probably look to take profits around -1.50 so be ready. We are looking at buying April on breaks as we will see the recently opened hog plants come on line and operate closer to full capacity. When that happens we expect competition will drive the prices higher for hogs.
We added a contract of June hogs on the open this morning, most traders should be up 25-40 cents depending on the fill. If you are looking to nitpick at our crystal ball, it was we should not have come out of our April shorts mid-week via Feb longs, just before the NAFTA innuendo from the media began to creep out. We are always going to have a difficulty predicting how the macro winds blow, in this case they provided some headwind to our purchases. But we are not fretting, we like owning Feb vs April right now and do not wish to get too short any of these commodity markets with US dollar trading at medium term lows vs major pairs.
Be ready for more action next week when things get going on Tuesday.
- Long 2 units of Feb hogs
- Short 2 units of April hogs
- Long 1 unit of June Hogs
Thanks as always for following along, have a safe weekend.
– Donna and John
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