October lean hog futures (HEV25) present a selling opportunity on more price weakness.
See on the daily bar chart for October lean hog futures that prices have backed down from the June high and the bears have gained some technical momentum. The price uptrend on the daily chart has been negated. See, too, that the red 9-day moving average has produced a bearish line crossover sell signal by crossing below the green 18-day moving average.
Fundamentally, the recent USDA quarterly hogs and pigs report showed higher-than-expected hog supplies and anticipation for greater supplies later this year. Cash hog (HEY00) and pork market fundamentals are starting to weaken. The CME lean hog index appears to have put in a seasonal top as the low in annual hog slaughter levels has occurred. Futures contracts trading below the cash hog market suggest traders believe a seasonal price top is in place.
A move in October lean hog futures prices below chart support at $91.525 would give the bears more power and it would also become a selling opportunity. The downside price objective would be $84.00, or below. Technical resistance, for which to place a protective buy stop just above, is located at $95.00.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%):
Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
