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Weekly Purcell Report

by 5m Editor
15 October 2003, at 12:00am

US - Agricultural US Commodity Market Report by Wayne D. Purcell, Agricultural and Applied Economics, Virginia Tech.



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Lean hogs have been pulled up by the cattle. December shows a new high at $60.90 in Tuesday's session with the close down $1.27 on the day as a reflection of lower prices in the more distant cattle contracts.

It is hard to ignore opportunities to price late 2003 and early 2004 hogs with the December up toward $60 or better, and I would look at placing or replacing short hedges on a rally toward that high.

If you are comfortable acting as a selective hedger, a good rule to follow is to buy back short hedges if the market shows two consecutive closes at new highs.

That approach will eliminate the occasional huge margin calls like those we are seeing now in the October live cattle and might make you more comfortable in selling this December lean hog contract on a rally to the contract high.


5m Editor