In the short term the market’s still reacting to a negative data series. After the containment of the PED virus that has carried to the exorbitant prices in July, the demand has clearly diminished and at the same time the production increased. By now the market has reached the lowest level since more than 5 years and it does not seem to want to change direction. Last week the USDA has recorded an increase of the +6,2% slaughterings to 2.26 million heads, an ulterior negative factor for the prices. The wholesale domestic demand of porcine meats has literally collapsed and reached the lowest level since 2010. Foreign demand has weakened as well: between January and November the exports shrunk by -1,7% to 4.46 billion pounds.
Short term the trend’s unquestionable down and can carry us straight until 40 cents/lb. But, analyzing the historical trend from 1999, the lean hogs futures are exactly on the support line, that gives us a purchase signal. Like in 1998, 2002 and 2009 the market could suddenly change direction, also in total absence of positive fundamentals. If my supposition’s exact, the hours of the reduction are counted… “after every rain the sun returns…”
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