Commodity Chart Of The Day: Lean Hogs

Includes: UBC
by: Matthew Bradbard

Commodity Chart of the day

Daily Lean hogs

(Click to enlarge)

In less than one month lean hog prices have gone from oversold to overbought. Lena hogs are on a short list of commodities that have been able to trade higher in recent weeks. From my stance the fact that prices have been unable to make it to higher ground and perhaps outside market influence I suspect prices are due for a correction.

Lean hogs are a 40,000 lb. contract which means every penny move in the futures results in a $400/move gain/loss per contract. Aggressive traders can get short or gain bearish exposure with an exit strategy if futures trade above 84.00 looking to capitalize on deprecation in the coming days to week. I would expect more selling once prices close below the 9 day MA which has supported for the last 2 weeks. My target is a trade back to 80.00 in the October contract. What makes this compelling is the risk to reward dynamic.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Disclaimer: The opinions contained herein are for general information only and not tailored to any specific investor's needs or investment goals. Any opinions expressed in this article are as of the date indicated. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. Past performance is not necessarily indicative of future results.