Lean Hogs
As we alluded to last week, there were signs that large specs may be losing their enthusiasm for buying hogs. In the week ended Tuesday, they were net buyers of just 301 contracts, while commercials were net buyers of 3,815 contracts and index funds were net sellers of 4,568 contracts.
We did establish small protective hedges early in the week and will continue to keep an eye on it. As discussed at length in The Brock Report this week on page 3, we are having a tough time getting bullish hogs from these prices. With continued price weakness next week we will likely be adding to our position.
Soybean Meal
In the week ended Tuesday large speculators were net buyers of 7,922 contracts, commercials net sellers of 10,731 and index funds were net buyers of 5,889 contracts. Specs are in no mans land and could head either direction from here, but following three weeks of buying through both new longs and short liquidation, and given their behavior in the rest of the commodity complex, we lean towards them continuing to buy meal.
Most active December futures appear rangebound between 300 and 330, and could stay there for some time. We maintain a small long position, but don’t see any reason to jump into or add to that until we break the 330 barrier, just $7 away from Friday’s close.
