ING DERIVATIVES CLEARING
209 South LaSalle, Chicago, Illinois
(October 31, 1997) HOGS: BEAR TRADING AFFAIR–The December hog hit the top end of our downside objectives of $60.00 to 58.00 several times and currently recovering on a smart rally. Part of the support is seasonal; part of it the discount to cash; part of it the sharp rise in the beef prices of the last week or so. The ham market bottomed out ahead of the holiday and cash bellies have been priced back into consumption. The fear over the Asian crisis stuff we feel has already been discounted...Japan took a lot less than expected and that trend likely to continue. Kills running in line and should get to 2 mln. head/week and with the record weights, there's plenty of excess tonnage around. If there's no appreciable increase in demand then, live hog prices could dip to a low of $40.00 tops before recovering at year's end/after the first. That would put the index at $58.00 or so, which is the low end of our downside objective. With the index at $66.00 currently then, December could still see pop back to $63.00-$64.00 on holiday demand. We're currently aside.
John W. Kleist
Commodity Consultant
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