Hello hog traders!
Deferred hog contracts are getting beat up because of the Coronavirus/travel bans in and out of China. The trade is taking away premium built in the back of the curve, while the front month remains steady because of tightening hog numbers and weights. If you were patient enough to hang in this spread, go ahead and take profits on the Feb-April leg. It is above -5.00, we think there may be more upside but we are going to keep the Feb-Aug on to hopefully participate.
Sell 1 unit of Feb hogs
Buy 1 unit of April hogs
This will leave you:
LONG 1 FEB HOGS
SHORT 1 AUGUST HOG
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