Lean Hog Fundamental Support
Traders spent the day discussing recent changes to cash hog pricing and the potential for a confirmed market top. Friday's cash hog report confirmed that we had broken out of the recent sideways range. The 61.14 price for the Iowa/Minnesota run is the lowest since Feb. 2.
Contributing to the cash hog issue is the fact that this week's kill will be a bit small. We have the usual low Friday and Saturday numbers up ahead. On top of this, Tar Heel was down yesterday and Beardstown is still having problems with its computer system upgrade.
Though this break is a bit off in terms of the timing, we still suggest it will work overall and that the second half of this month will see pressure. Our price outlooks call for a $70 expiration for the April and $78 for the June. This market is still overvalued on the deferreds.
Friday's quarterly Hogs and Pigs report has been scheduled for noon. There will be no trade on Friday for futures.
We don't look for any big moves before discussing next week's monthly Cold Storage report. We have to remind you that we are coming off of a bearish one last month. The November - January reports all came in with bigger than expected outflows (bullish). The February report showed a surprisingly large 91 million pound inflow into storage with was bigger than the 75 million five year average. For this report we expect a 48 million pound inflow in to storage which is near the 45 normally seen.