Seeking Alpha

Debbie.Sheperd's  Instablog

Debbie.Sheperd
Send Message
As a broker for Worldwide Futures Systems I work with clients to develop a truly diversified portfolio. Traditional portfolios are exposed to equities and bonds and WWFS offers the opportunity to invest in commodities and currencies through managed futures trading systems. By only selecting... More
My company:
Worldwide Futures Sysytems
My blog:
Debbie's Futures Commentary
  • Lean Hogs: Bullish Bias 0 comments
    Jan 23, 2013 3:56 PM

    Lean Hogs: Bullish Bias

    Lean Hogs may be poised to reach new highs, as global demand picks up and supplies remain tight. After reaching all-time record highs of over of 88.10 cents per pound in November 2012, hog prices beat a swift retreat to 84.00 cents on Jan 14, as the higher prices led producers to bring more of the beasts to slaughter. Producers had a particularly rough 2012, selling their herd for an average of a $17 loss per head. High grain prices were the main culprit of the deficit, but also contributing was a weak per pound weight with the average hog weigh in at just 207 lbs vs. an average of 210 lbs. Bacon could possibly come in short supply with those numbers.

    Since the beginning of the year, prices and the outlook have rebounded, leaving producers enthusiastically looking for higher margins as they see softening grain prices and respectable prices in 2013. Seasonally, Hog futures tend to experience a rise in prices from January 15 to February 15, having done so in eight of the last 10 years. In the US itself, prices are "still not high enough to spur higher pig production" to offset extra demand pressure (Futures Magazine).
    In fact, feed price induced declines in production have resulted in the lowest ending stocks in over 15 years (Agrimoney.com).

    However, several factors could stall the upward move at these levels. Despite predicting tight supplies, inventories remain persistently high, with the USDA report on December 28 showing slightly higher numbers than the market had expected (Farm Futures 12-28-12). In fact, yesterday afternoon USDA Cold Storage report showed December pork in cold storage declining from November but narrowly missing setting an all-time high for the month of December (Minn Farm Guide 1-23. Technically speaking, the market will reach major resistance as prices test the 88.00 cents per pound level reached in mid-December.

    Commodity prices overall have languished so far in 2013, as investors and funds have rushed into equity markets. Timing could be just right for a turnaround with some analysts now recommending an overweight position in lean hogs, forecasting an improvement in pork prices in China, the main consumer of the meat. "Chinese imports of US pork have moderated, but should pick up again through 2013," SocGen analyst Jeremy Friesen said (Agrimoney 1-17). Lean hog futures have proven to be one of the most reliable for gains among agricultural commodities. A tightening supply environment, coupled with strong export demand, should limit any downside move in the near-term (Bloomberg 1-17).

    Investors and advisors should take a look at commodity futures, particularly managed futures, for inclusions into a well-diversified portfolio thereby positioning themselves for large price moves as the global economy improves. So let's enjoy our bacon before prices become out of reach.

    The Survival Plan and the Diversified Commodity Basket are trade Lean Hog Futures and are currently long.

    Regards,
    Debbie Sheperd
    sheperd@wwfsystems.com

    This material has been prepared by a sales or trading employee or agent or associated persons of Postrock Brokerage, LLC and is, or is in the nature of, a solicitation. This material is not a research report prepared by Postrock's Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.

    DISTRIBUTION IN SOME JURISDICTIONS MAY BE PROHIBITED OR RESTRICTED BY LAW. PERSONS IN POSSESSION OF THIS COMMUNICATION INDIRECTLY SHOULD INFORM THEMSELVES ABOUT AND OBSERVE ANY SUCH PROHIBITION OR RESTRICTIONS. TO THE EXTENT THAT YOU HAVE RECEIVED THIS COMMUNICATION INDIRECTLY AND SOLICITATIONS ARE PROHIBITED IN YOUR JURISDICTION WITHOUT REGISTRATION, THE MARKET COMMENTARY IN THIS COMMUNICATION SHOULD NOT BE CONSIDERED A SOLICITATION.

    The risk of loss in trading futures and/or options is substantial and each investor and/or trader must consider whether this is a suitable investment. Past performance, whether actual or indicated by simulated historical tests of strategies, is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that Postrock Brokerage, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

    Worldwide Futures Systems is a registered branch office and dba of Postrock Brokerage, LLC [NFA ID: 0413763]

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

Back To Debbie.Sheperd's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers
Posts by Themes
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.