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FuturesCom Special Report
05/11/97 12:55:14 PM
Bellies and Hogs have been in bull mkts for quite Some time now.. However we believe that will soon end as the increases in demand, as a result of more export expectations to the Far East has been met by higher prices, which at some point will cause ‘Price rationing occur and
e all know what happens... other wise what goes up must go down...
If Pork Bellies were going to Jump out and go to 105-115 as many analysts have predicted then why are the Commercials Short ... as of May 6 .......... 1107 and long only 184. Over the last few week bellies have been going thru a choppy action,,,, However we feel that a good break is ‘in the cards’ , for now we recommend that our subscribers maintain a short posture in both hogs and bellies..
Sell July Hogs, August Hogs , July Bellies and August Bellies...
Do not short June hogs
Our sources in the industry are in agreement with us that prices are too
high to justify what “business has taken place “ we don’t see Japan coming with ‘open pocket books’ to suck up extra pork.
Sure the decrease in exports by Thailand due to diseased pork is a warranted reason for a jump. But the Jump happened. Now it ‘feels’ like the whole place is long pork waiting for the next guy to buy.
. On Friday July Hogs hit new contract highs but ended near the lows and unchanged on the day
Not a good sign. August Hogs made a new highs and closed lower...! Bellies were lower all day..
all this happened while Cattle was up over 100 pts.
We call that sloppy and weak..
We must emphasize the pork industry usually takes a breather During August and late July.
As the Dog Days set in.
There is some talk of heavier weight hogs showing up...and finally we still have an ever expanding Large Corporate Hogs farms..
We suspect that the cash price of Bellies will stay steady and eventually be near 80 cents in August .which means to us that Frozen August bellies are worth only 76 cents.
. Our Opinion is that Bellies will trade near 80 cent before we see 100.....
So in finality we recommend to our readers a short posture in July bellies for the next three to five weeks .. As we suspect that the price will drop from near 9000 cent to somewhere near 8400 or owner Which amounts to $ 2,400 per contract or $ 150 % of margin required to hold the Bellies..
We also recommend shorting August Hogs on rallies and maintain long June short July or August spreads...
Where do you short Bellies ? carefully on rallies .. however we feel a
close under 8992 should cause some selling.
Who knows a trader might get lucky and the funds may Blow and get short down the road leading to a decline similar to last year...
On May 1996 July pork Bellies were priced at 9155 by June 29th the price hit 6900
. Stay tuned