• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer
Daniels Trading

Independent. Objective. Reliable.

Top Navigation

  • Open a Futures Account
  • Sign Up
  • Log in
  • 1.800.800.3840

Primary Navigation Menu

  • About
    • Who We Are
    • Services
    • Careers
    • Risk Disclosure
    • COVID-19
  • Trade
    • Broker-Assisted
    • Self-Directed / Online
    • Request Pricing
  • Hedge
    • DanielsAg Mobile App
    • Ag Marketing Plan
    • WASDE Analysis
    • Grain Resources
    • Livestock / Dairy Resources
    • Hedging Videos
    • Request Pricing
  • Invest
    • Automated Strategies
    • Managed Futures
    • Request Pricing
  • Advisories
    • GENERAL / FUNDAMENTAL
      • DT Newsletter
      • Insider Market Advisory
      • Turner’s Take Newsletter & Podcast
    • TECHNICAL ANALYSIS
      • The Cullen Outlook
      • Data Feed Trade
      • Jarboe Trading Journal
      • Trade Spotlight
    • AG MARKETING
      • Cattleman’s Advisory
      • The Swine Times
      • Technical Ag Knowledge
      • This Week in Grain
      • Turner’s Take Ag Marketing
    • THIRD-PARTY RESOURCES
      • CFRN
      • Moore Research Center, Inc. (MRCI)
      • OptionWorks®
      • TASMarketProfile.com
  • Education
    • CME Group Resource Center
    • Small Exchange Resources
    • Guides
    • Frequently Asked Questions
    • Order Entry Handbook
    • Webinars
  • Blog
    • Futures 101
    • Ag Marketing
    • Tips & Strategies
    • Trading Advisories
  • Resources
    • Trading Software
    • Quotes and Charts
    • Futures Calendars
    • Contract Specifications
    • Margin Requirements
    • Futures Calculator
  • Accounts
    • GAIN Capital Futures
    • StoneX
  • Contact
Home / Futures Blog / The Swine Times: Weekly Report – February 11-15, 2019

The Swine Times: Weekly Report – February 11-15, 2019

February 11, 2019 by Alec Torrey

Current State of the Markets:

Last week the lean hog futures markets started on a tear to the upside closing limit up in April, only to fizzle out by Tuesday afternoon and cruise lower into the weekend. We shorted the board about 1.80 too early on Monday.  Were happy with how the week ended but certainly could have timed things better. This is how it goes sometimes.  The long talked about Chinese US pork demand has yet to materialize, and the CME has spent the last month extracting premiums.  I know there are a lot of guys out there who are screaming to get long. If you followed them in at higher prices I don’t think it is smart to bail – we think a bounce is at hand.

April and June 2019 Hog futures are now back to normal values relative to cash, but the current problem in the hog market is that pork demand has not kept pace with the increase in production. Both the pork cutout and cash hog values are below a year ago, while front month February goes off the board near a contract low.  Meat traders are praying that China will become a larger pork importer of US or other world pork sometime in 2019.  It feels like the market lost some hope when the Trump announced the late Feb meeting with China’s Xi wouldn’t take place. Futures are oversold, to get any turnaround to hold, slaughter needs to fall a couple hundred thousand as we get into the spring.

Current Positions in April & June 2019 Hogs:

  • Short 1 April 2019 Hog
  • Long 2 June 2019 Hogs

CME lean Hog Index Chart

Looking Into Next Week:

Pork Loins

  • Our call on the loins and butts last week was steady to firm and bottoming.  We are still on track with that belief.  There is a caveat, as slaughter needs to slow down. The front of the curve may have a tough time rallying as long as slaughter remains at this level.  If you recall, weekly slaughter was in the 2.3 million as front month contracts were going off near even to the next contract.  This week Feb goes off, it currently sits at a 4.00 discount.  As long as the weekly kills levels stay at or above 2.5 million head, all of the cuts on the USDA will have a tough time going higher.

Ham

  • The ham market has not only had to deal with the large weekly kills but the tariffs imposed because of the trade imbalance with Mexico and Canada. While the new agreement has had much publicity, it will definitely help US meat exports, hams included.  But the NAFTA replacement is not through congress yet and will have a tough time passing in this political environment.  Exports should be constrained until it does.

Pork Belly

  • The belly has performed decently, but hurdles remain. The question is can the bellies stay above a $110? Only if slaughters would slow.  If we are seeing kills above 2.5 million over the next few weeks, sustained rallies driven by bellies in April futures will be difficult to come by.
  • The industry will need exports to offset the extra production otherwise product prices will continue to deteriorate into the spring. As a result packer margins will narrow.
  • There are China talks scheduled in Beijing this week.  We took a long June position with anticipation the board puts in some premium sometime soon.
  • The weekly live weights should stay in a 2 to 3 lbs. range for the next several weeks, if the producers keep marketing their hogs in a timely manner.

How We Trade April & June 2019 Hogs:

  • We are looking for hard breaks in order to buy summer hogs and are gambling the slaughter will slow as profit margins narrow. Our advice is to be patient and look to buy summer hogs on breaks. We believe that under $74 June 2019 hogs are a value.  The market has a steady carry between June and August. The downside could be somewhat limited in June, selling should occur in April if given the reason.  We plan on selling J on rallies.
  • We still like buying April hogs on breaks and trading them from the long side for a 100 to 200 point rally. Or you can do it the other way sell April hogs on a 1-200 point rally.  Both of these recommendations are just trades to try and a capture a few dollars. We caution our readers that neither one of these trades buying or selling April hogs is meant to be a long term trade if the rec comes out.
  • Pay attention to the 10 day forecasts especially the potential for cold fronts or snow storms predicted.  We have a couple of storms approaching the eastern and western corn belts as of this writing.

February 4 - February 8 Hog Price Chart
* USDA National Hog and Pork summary
** Expressed in thousand head


If you are not already a subscriber to The Swine Times, click here to have The Swine Times delivered to your inbox!


Hedgers Guide to Covered Calls


This article originally appeared in the The Swine Times Newsletter “The Swine Times 2/11-2/15” on 02/11/19.

Risk Disclosure

THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.

THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.

TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.

YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.

GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.

Filed Under: The Swine Times

About Alec Torrey

Primary Sidebar

Get Blog Updates

Subscribe to our blog and receive a daily email with information on market insights, trading tips & strategies.

Trustpilot

Footer

Site Navigation

  • Frequently Asked Questions
  • About Us
  • Customer Reviews
  • Contact Us
  • Futures Blog
  • Open a Futures Trading Account
  • Media Resources
  • Fund Your Account
  • Legal Notices

Contact Us

Daniels Trading
100 South Wacker Drive, Suite 1225
Chicago, IL 60606
+1.312.706.7600 Local / Int'l
+1.800.800.3840 Toll-Free
+1.312.706.7605 Fax

Connect with Us

Trustpilot

Copyright © 2021 · Daniels Trading. All rights reserved.

Risk Disclosure

THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.

THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.

PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.

TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.

YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.

GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.

  • Risk Disclosure
  • Privacy Policy
  • California Residents Privacy Notice
  • Terms of Use
  • Back to top