Hog futures in the February contract settled last Friday in Chicago at 67.55 while currently trading at 69.60. I am now recommending a bullish position while placing the stop-loss below the contract low and low yearly standing at the August 5th low of 63.67 as the risk is around $2,500 per contract plus slippage and commission.
The United States and China agreed on a phase one trade agreement, which certainly should pick up demand for pork. China has lost 250 million hogs due to the swine flu as that is why you see hog prices trade higher over the last 2 consecutive sessions and historically speaking, prices look very cheap.
Hog prices are trading above their 20-day but still under their 100-day moving average, which stands around the 72.40 level as prices have been depressed for quite some time because we've had no agreement with China. Still, that situation has changed as I think the risk/reward is in your favor to take a bullish position. I think the 65 level will hold so play this to the upside while making sure that you risk 2% of your account balance on any given trade as the proper risk management strategy.
CHART STRUCTURE: EXCELLENT
Live Cattle Futures
Live cattle futures in the February contract is sharply higher this Friday afternoon in Chicago up 250 points at 127.60, hitting a fresh contract high. Prices are reacting strongly because of the phase 1 trade agreement with China as most agricultural markets are higher across the board as that is an extremely bullish fundamental factor for higher prices ahead.
Continue reading "Weekly Futures Recap With Mike Seery"