Dennis Smith from Archer Financial Services, Huge Jump in Hog Open Interest on the Higher Close

By Dennis Smith  


Wednesday, December 22, 2021 


And the beat goes on. Corn prices have not been this high since July 1. Wow. Crazy times. What a huge selling opportunity. Dec corn is priced above 550 and Dec 23 corn is now priced above 500. This is occurring in the face of rising projected ending stocks. But guess what, our book has zero interest in hedging Dec22 and Dec 23 corn at current prices. Soybeans are strong and wheat is also involved. Wheat has the strongest fundamentals, IMO. Thus, we have a bullish wheat position on the book. The U.S. announced they’ll meet with Russia next month to discuss the troop build-up along Ukraine. Biden is trying to pull the natural gas pipeline from Russia into Germany into the talks and neither side, Russia or Germany are interested in doing this. Frankly, Germany needs the natural gas. OMI, an invasion toward the end of February is highly likely. If there’s a pullback in January I’ll look at some bullish corn strategies. Rising grain prices is bullish the meats.  


Cash was higher yesterday although the cutout was down $1.58. On the powerful strong performance and close yesterday open interest in hog futures was sharply higher, up 6,784 cars. OI in Feb alone was up 3,786. I consider this very bullish information. Someone’s nose is twitching, someone smells something bullish on the horizon. Monthly cold storage should be bullish as it confirms very tight frozen stocks running around 25% below the 5-year average. If the hog & pig is not bearish and if the CA prop 12 is not enforceable on Jan 1, hog prices should be headed higher to sharply higher. There’s talk of continued strong economic growth in the U.S. next year driving unemployment to 70-year lows. Folks, this is bullish toward meat consumption. The hog & pig estimates are listed below. No new rec for today. Hog weights, by the way, were down 1.5 pounds last week and now they’re running nearly even with last year.  


All hogs & pigs 97% 96-99 

Kept for breeding  100% 99-100 

Kept for marketing  97% 96-99 

Sep/Nov pig crop 97% 96-99 

Pigs/litter 100.5% 100-101 

Sep/Nov farrowings 97% 96-99 

Dec/Feb intentions 101% 100-101 

Mar/May intentions 100% 98-102 



On the higher close in LC futures yesterday we finally saw a rise in open interest. Total OI was up 1,951. Consider this a very constructive development. I’m expecting a $1.35 cash trade this week and next. The Federal Reserve Bank indicated yesterday that growth in the 4th quarter is projected to be 7% with growth for 2021 pegged at 6%. They’re projecting growth for 2022 at 4% which is very strong growth. They further project unemployent to drop to the lowest levels in 70-years in 2022. If this is accurate, when combined with the “new beef export pace , cattle prices should move sharply higher in the next year. The futures market has not factored this into the prices yet with Oct LC closing yesterday just above 138, or just 3 cents over the cash steer market. Yes, I’m bullish. The on-feed estimates are listed below.  


ON-FEED  100%  99-103 

PLACEMENTS 103% 96-107 

MARKETINGS 104% 104-105 


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