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Weekly Purcell Report

by 5m Editor
22 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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The hog market is feeling some of the volatility and the uncertainty that is coming over from the beef complex, and it is feeling the weight of seasonal increases in daily slaughter levels that are running bigger than most had anticipated.

Early last week, the December lean hog contract ran above the $60 level and tried to take out the old contract high, which had been $59.50 back on September 11. Then the heavier slaughter levels and some weakness in pork cutout started to hit the market and there was a major price plunge to the downside on Monday and December closed limit down on Tuesday.

I would hold short hedges in this market into the early months of next year. It has not been an easy thing to do, but I have been suggesting in recent weeks that this market needs to be rewarded with short hedges and selling when it rallies to the highs.

It appears that we have a fairly normal seasonal increase in daily slaughter levels in spite of the fact that the reports had been showing the breeding herd and total inventories in a bit more positive vane.


5m Editor