As we delve into the December lean hog (HEZ25) futures market, current trends reveal a potential selling opportunity as prices appear to be weakening.
Examining the daily bar chart for December lean hog futures, it seems that the price uptrend is beginning to roll over. Additionally, the moving average convergence divergence (MACD) indicator at the bottom of the chart reflects a bearish outlook, with the blue MACD line having crossed below the red trigger line, and both indicators are trending downward.
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From a fundamental standpoint, hog slaughter levels typically see a seasonal increase in early fall, while consumer demand for grilling—and specifically for favorites like the bacon, lettuce, and tomato sandwich (BLT)—starts to decline. The recent decreases in cattle futures (LEV25) and (GFV25) are also contributing negatively to the market sentiment surrounding hog futures.
A potential bearish move in December lean hog futures below last week’s support level at $86.525 could energize the bears further, signaling a solid selling opportunity. A downside price target in this scenario would be set at $79.00 or lower. For those considering protective strategies, the technical resistance level is identified at $90.00, where a buy stop might be appropriate.
IMPORTANT NOTE: Please note that I am not a futures broker and do not manage any accounts except my own personal investments. My intent is to highlight potential trading opportunities for your consideration. Ultimately, it is your responsibility to decide when and how to trade, as well as the size of any positions you may choose to take. The trades discussed herein are purely hypothetical.
The Commodity Futures Trading Commission (CFTC) has provided the following important reminder regarding futures trading (and I fully endorse this message):
Engaging in commodity futures and options trading is not suited for everyone. IT CAN BE VOLATILE, COMPLEX, AND RISKY. Before you commit any capital to futures or options contracts, please evaluate your financial experience, objectives, and resources. Understand your capacity to absorb potential losses beyond your initial investment with a broker. Educate yourself about commodity futures and options contracts, and familiarize yourself with your obligations when entering these agreements. Thoroughly comprehend your risk exposure and other trading fundamentals by reviewing risk disclosure documents provided by your broker.
At the time of publication, Jim Wyckoff held no direct or indirect positions in any of the securities discussed in this article. All data and information has been provided for informational purposes only. This article was originally published on Barchart.com.
