Lean Hogs Analysis – Estimates of lower US demand bearish for Lean Hogs

By IFCMarkets

Estimates of lower US demand bearish for LHOG

June WASDE report estimates lower pork production in 2018 on lower current prices and commercial demand. Will the LHOG continue declining?

The US Department of Agriculture WASDE June report estimated pork production for 2018 will be lower as signs of weaker demand based on current pace of second-quarter slaughter and lower-expected commercial slaughter in the third quarter. Separately, spot weaner pig volume was below average last week, at 30,794 head reported – this is 97% of the 52-week average. And spot prices for weaner pigs declined too, for the second consecutive week. Estimates of US lower demand is bearish for pork prices.

On the daily timeframe the LHOG: D1 is testing the 50-day moving average MA(50) which has leveled off, this is bearish. The price has breached below the support line.

• The Parabolic indicator gives a sell signal.
• The Donchian channel indicates downtrend: it is tilted lower.
• The MACD indicator gives a bearish signal: it is above the signal line and the gap is narrowing.
• The Stochastic oscillator has breached into the oversold zone, this is bullish.

We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 75.881 This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the upper Donchian boundary at 83.063. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (83.063) without reaching the order (75.881), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary

Market Analysis provided by IFCMarkets