February lean hog futures at the Chicago Mercantile Exchange on Wednesday gapped lower on the daily bar chart and hit a fresh two-week low. Prices are now back down near strong technical support at the contract low of $58.90. Prices are also in a six-week-old downtrending channel on the daily bar chart. A close below strong chart support at the contract low of $58.90 would produce still more technical damage to suggest a quick price move to the lower boundary of the downtrending channel, which is located at the $57.50 price level in February lean hogs.
For the hog market bulls to begin to regain some fresh upside near-term technical momentum, they would have to push February futures prices back to the $61.27 level, which is the top of Wednesday’s downside price gap on the daily bar chart.
click on the chart to enlargeSeasonality studies do show lean hog futures prices tending to trend lower from the February timeframe into the April timeframe, before embarking on a solid price uptrend into the August timeframe. Importantly, like many other commodity futures markets at present, the lean hog futures market will continue to be influenced by the key “outside markets”–crude oil futures and the value of the U.S. dollar versus the other major currencies. Any crude oil strength and dollar weakness would support the hog futures market. Any crude oil weakness and dollar strength would be a bearish influence on the hog futures.–Stay tuned! Jim Wyckoff