Genesus Global Market Report USA, November 2020

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Genesus Global Market Report
USA, November 2020

Allan Bentley, Sales, Genesus Genetics Inc.

Are you the KING or the COURT JESTER?

I found this chart showing resistance and support levels in the weekly hog chart. It shows that we have had opportunities to hedge hogs and will again. Today… probably not, as we are right in the middle. When the weekly chart returns to a level above that $80 mark we need to reward it and hedge some hogs.

The million-dollar question is, are we heading below the support or above the resistance? As you can see 90% of the time is spent in the middle and that is where we will stay until more details come out about Covid Vaccines, POTUS changes if any, and that effect on policy changes regarding America first and if that will continue.

Visually looking at this chart, we spend more time below $59 then we do above $78. I would always remember that. By the time we hit $90 hogs, you should have sales using futures finished up.

Turning hedges into cash is still troublesome. Basis has to addressed. That basis, as I have said before, used to be a manageable part of marketing. Today I have no idea what cash hogs are bringing the producer. There is $20/cwt difference in formula pricing today. You might look like a King hedging hogs a month ago at $80 but if you have a $20 basis to contend with when you lift those hedges you are now the court jester. Marketing is more important than ever.

To me, this chart says when to sell and how far out to sell (about a year) when market gets above $80. The more difficult challenge we have is managing the basis. Until we get a handle on what the cash market really is, this will continue to be a conundrum.

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