Soybean Meal
The COT for soybean meal has been a great indicator as of late for future price action. Large specs held a sizeable net long position as of late may, and as they unwound those longs it pressured prices, the October contract falling about $75 into mid July.
Now we are in a situation where the report doesn’t tell us much, other than we are impressed at how prices have rallied since their mid July low. Modest new longs and short covering has been a factor. Pair that with a positive technical picture, not to mention the large sell off, and we recommended buyers procure meal needs on Friday. See TBR’s feed page for more on that.
Lean Hogs
Hog futures have taken traders on a wild ride the last few months, or perhaps a more fitting way to put it in this immediate context is that…traders have taken lean hog futures for a wild ride.
We spilt a lot of ink talking about large spec selling being a bearish factor, and it in fact pressured prices from April to mid July, with the October contract falling more than $20 before bottoming just above $68. Since then, the reverse has happened. We don’t recall any report being a better indication of price activity than this. Recent short covering has driven hog prices back up, and has us a bit concerned that the sell off earlier this week and subsequent trading is nothing more than a bull flag, which would provide an upside target of roughly $84. We will watch our small hedge position carefully.
