RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

August hogs closed higher for the first time this week on Thursday, closing up to 1.625 to 70.300, off its highs of the day at 71.050. The market fell from Monday’s high of 75.850 down 7.325 to this week’s current low of 68.525 which was hit on Wednesday. The hog market is searching for support as it tries to price in a surplus of product and a loss of US exports. Uncertainty in tariffs and trade war fears continue to be the driving force as in so many other markets right now. The hog market was already forecasting an increase in production for the second half of the year and now there is a possibility of a decrease in exports to Mexico and China, who combine for 40% of US exports annually. The USDA estimate for hog slaughter was up from both last week and this same time last year. August hogs traded to a 13-cent discount to the cash market this week, down from the normal 4.5 cent discount. The large discount to the cash market and some short covering explains yesterdays bounce, although falling from the highs does not give confidence to the bulls. The selloff this week has lowered momentum studies to oversold levels which could also provide some support. If the move lower continues look for trade down to Wednesday’s low of 68.525, with some support coming in at 69.50. Resistance comes in at 71.30 and 72.50 with a close over Thursday’s high needed to reverse the trend back to the upside.

Lean Hogs Aug ’18 Daily Chart

Lean Hogs Aug '18 Daily Chart

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Tyler Herrmann

Senior Market Strategist
Tyler attended Kansas State University where he majored in Agricultural Economics. He started his career in the futures industry with an IB in North East Kansas where he worked with farmers and cattleman to hedge their risk in the market and protect profits with a variety of futures and options strategies. Most recently Tyler has joined RJO Futures as a market strategist.
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