Where’s Wilbur?

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Image result for wilbur the pig

Now that the biblical rains from Florence have subsided, the main concern for North and South Carolina residents is dam breaches. While the storm moved toward the Appalachian Mountains, swollen rivers were still a problem, with some not forecast to crest until later this week. reports the WSJ.

North Carolina Gov. Roy Cooper said at a news conference Monday.“The next few days will be long ones as the flooding continues.

leanhogsflooding.JPG(Source: WSJ)


With river banks swelling and most overflowing their banks at this point,  contamination risks are on the rise for North Carolina’s drinking-water supply. There is also concern that heavy rains could breach hog-waste lagoons in the state, which is a major pork producer.

The open-air holding ponds present a risk of contaminating groundwater with manure stored on the state’s 2,100 hog farms. State officials have reported problems with more than a dozen waste lagoons in several counties.

By midday Monday, the North Carolina Department of Environmental Quality reported two waste lagoons that had been breached, seven where heavy rain caused spillage over the top, and four that were inundated with floodwaters.

(Source: WSJ)


So what’s all this mean for Lean Hog futures?

Well, the October Lean Hog contract settled up 22bps to 56.45.

 

With most major hog producers well prepared ahead of the storm thus, reducing the concerns of a supply shock weighed on the October and deferred contracts.

December Lean Hog contract: 

October Lean Hog contract – December Lean Hog contract: 

In addition, there are new cases of swine fever being reported from China, which damped the new buying interest.

African Swine Fever(Source: Texas Farm Bureau )


Technically speaking momentum studies are signaling overbought, however, the October contract did close above its HLC Average Band that could support prices higher from its current level.

Volatility remains elevated within the space.

On the Lean Hog YTD continuous chart, I see a series of higher highs, usually supportive of prices moving higher, but given the macro backdrop, I see a search for the bottom from the recent highs underway, possibly down to 47.450 (TDST Trend Line *red). 


R.W.N II

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