January 16, 2009
CME February lean hog bears gain power this week
Chicago Mercantile Exchange \ February lean hog futures on Wednesday (January 14) were lower on the daily bar chart and hit a fresh two-week low.
Prices are now back down near strong technical support at the contract low of 58.90 cents a pound. Prices are also in a six-week-old downtrending channel on the daily bar chart.
A close below strong chart support at the contract low of 58.90 cents would produce still more technical damage to suggest a quick price move to the lower boundary of the downtrending channel, which is located at the 57.50-cent level in February lean hogs.
For the hog market bulls to begin to regain some fresh upside near-term technical momentum, they would have to push February futures prices back to 61.27 cents, which is the top of Wednesday's downside price gap on the daily bar chart.
Seasonality studies do show lean hog futures prices tending to trend lower from the February timeframe into the April timeframe, before embarking on a solid price uptrend into the August timeframe.
Most important, like many other commodity futures markets at present the lean hog futures market will continue to be influenced by the key "outside markets," such as crude oil futures or the US dollar versus the other major currencies. Any crude oil strength and dollar weakness would support the hog futures market. Any crude oil weakness and dollar strength would be a bearish influence on the hog futures.
