Pre-report expectations were for the breeding herd to be down about 4 percent from last year, so that added slight reduction in the breeding herd is giving some hope that hog prices will increase. I would surely forward price those fourth quarter hogs up at those levels. I do not expect to see this market move up from here and leave the huge chart gap left on those futures charts for the fall and winter months. I would also look at forward pricing the summer hogs on this surge. On a scale-up basis from this level, either add to pricing in this market or hook a trend line across the lows of February 24 and March 23 and be ready to hit this market hard with price protection when you see a close below that trend line.
Cattle markets are glad to work higher with strength in the pork complex.
On the June and summer live cattle contracts, I see Tuesday's closes as moving above the rather apparent downtrend line that can be drawn across recent descending highs. I would sell the June futures aggressively on a rally to that level. Cattle numbers will be large as we move through the spring and into the early summer months, and we are still benefiting from good demand performance in both beef and pork. Any signs of slowing of the economy could start to eat into that continued demand-based source of price strength. I think the prudent course here is to get these cattle forward priced on a rally.