Hello hog traders!
The Feb Aug spread is getting licked today as money runs out of the front of the curve. We think this is a bit over done up front and want to buy the April and Sell an Aug. We believe the packer is going to need to keep the kill strong over the next several months no matter what. They have committed a lot of product via exports in recent weeks and the break up front will only encourage them to continue to produce. This is really more of a spread against Aug. The Aug (and Oct) contract is staring down what we feel is an Armageddon scenario where we have massive hog herds with no place for them to go. We are going to try and price at 14.00, it traded there this morning for a minute or two but immediately rallied to 13.60. We are going to be patient for a few hours, you don’t have to be if you don’t want to. We will likely try to fill this today at some point. I’ll check back in later to let you know.
Buy 1 unit of April hogs
Sell 1 unit of August hogs
This will leave you:
LONG 1 FEB HOGS
LONG 1 APRIL HOG
SHORT 2 AUGUST HOG
Subscribe to The Swine Times
The Swine Times - The Swine Times newsletter is designed to help participants in the pork complex understand and trade the futures markets. Our intention is to fundamentally inform and trade based off the information we have.
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 third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.