Expecting Record High for Fourth Quarter Pork Production

November 8, 2017 11:10AM CST

December hogs have closed lower for the fifth session in a row, and the turn down in open interest from an extremely high level suggests that long liquidation selling is in place. A slowdown in packer demand for slaughter last week with an active and record high supply flow is a bearish development, and if pork cutouts turn down into early December, the market is vulnerable to further short selling. While slaughter was down 3.1% from last year last week, pork production for the fourth quarter is expected to reach a record high of 7.035 billion pounds, which is up 5.8% from last year and the selling yesterday pushed this marker down to the lowest level since October 24.

MARKET IDEAS: The December lean hogs market is reaching oversold levels, however a long liquidation-selling trend looks likely if pork values turn down due to likelihood of record weekly slaughters in the weeks ahead. Resistance is at 65.35, with 63.42, and 61.97 as key support levels. Traders could consider selling a bounce if we break above these resistance levels.


Dec '17 Lean Hogs Daily Chart

Dec '17 Lean Hogs Daily Chart

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.