August 19, 2009

Chicago Mercantile Exchange hogs could start Tuesday's (August 18) session mostly lower on possible leftover selling and overnight Globex hog losses, said analysts and brokers.

 

Potential early lean hog declines could press spot-October and nearby-December to fresh seasonal lows.

 

Also, Monday's 430,000-head hog kill could "spook" floor traders at first, a broker said. And, he said, uninspiring outside markets and flat electronic Chicago Board of Trade corn may diminish back-month hog buying interest.

 

By the same token, potential short covering and late Monday's 88-cent-per-hundredweight pork cutout price increase could become positive market influences.

 

Mainly steady cash hog price expectations and profitable pork packer profit margins are more positive market influences.

 

The Dow Jones packer margin index for Monday's operations was plus US$8.90, compared with plus US$7.04 the previous day.

 

Furthermore, speculative bulls may zero in on spot-October and nearby-December oversold Relative Strength Index conditions and their discounts to CME's hog index.

 

The October 43.8-cent Aug. 12 low serves as an area of price support. The contract's last seasonal low was Monday at 43.6.

 

October's 45.6 Aug. 13 high is a price resistance target.

 

December's 43.62 Monday low is a price support area. The contract's 45.55 10-day moving average is a resistance obstacle.

 

CME bellies could also begin the morning mixed.

 

Possible follow-through buying and Monday evening's steady fresh belly quote at US$65 per hundredweight are bullish market features. Also, September's oversold chart signal is another market plus.

 

However, potential profit taking after Monday's runup and threatening hog kills are bearish futures influences. Furthermore, belly traders may take their cue from possible initial lean hog selling.

 

The CME reported 4 belly deliveries against August futures that will expire on Aug. 26.

 

And, the exchange's weekly belly storage report will be released on Tuesday after 5 p.m. EDT.

 

August' 40.95-cents Monday low is a price support level. The contract has a chart gap between Monday's 40.95 low and Friday's 40.00 high.

 

August' 42.25 Aug. 13 high is a price resistance threshold.

 

February's 78.42 Friday low is a price support mark. The contract's last contract low was Monday at 78.37.

 

February's 78.75 Aug. 12 low is a price resistance point