December Lean Hogs Trying to Fill the Gap

Strategy of the Day 11.19.2019

December Lean Hogs Trying to Fill the Gap

Pressure remains on the December 19 lean hog futures, with the market pressing to fresh November lows of 61.295 today. While the sell off has been more of a grind lower than a clear trend, I pointed out in previous STOD that the failure of the December hogs to break out of its September trading range highs (72.50 area), may result in a gap fill down to the 61.75 area if the China/US trade deal were to delay. This is an instance where early optimism created a rally in September, when trade deal talks were highly anticipating a Phase 1 deal signing, and a potential solution to the US demand problem. As the can keeps getting kicked down the road, that optimism has faded, and the original bid that drove prices higher has been faded back to the levels it began from. When its all said and done, all the price action since September, has been nothing more than a trading range (highlighted in grey is the month of Septembers price action).

The story is not over for US pork however, as US producers have made major production adjustments to accommodate Chinese demand. The anticipation of real exports to China...

Dan's full Strategy of the Day is available for PDF download:

http://intranet.zaner.com/uploads/dhussey/SOTD/SOTD_11.19.2019.pdf