Pork Situation
4-16-2000
Bellies Bellies , Who’s got the bellies?
We would like to alert readers to a situation developing in the Belly
mkt.
As you know we have been friendly to the Belly mkt. for quite some
time and remain so..
Our Belief is that May and July Bellies will make a move towards
the 9800 to 103 level Sometime over
the next 8 weeks and recommended buying into weakness.
Considering, there are only about 44 deliverable contracts
of May bellies in storage
Additional longs on weakness may be appropriate.
Our Take on the situation is as follows..
The decline to the 8800 region was a result of traders got scared when the exchange changed delivery details to allow more bellies in the pipe line it declined .. Once that was out of the way it made new highs … After Cold storage and pig crop reports confirm that supply is just not there for the meat, coupled with a insatiable demand
The recent decline was a result of The CME Increasing margins on the Spot month to 4800 per contract well before the spot month began… The exchange figured it would raise margins force some longs out and settle the thing down… what it did not anticipate is that new shorts would come in at the same time that Demand would start to pick up. Mean while the selling fell into Strong Hands.
I Say let the mkt. PLAY ITSELF OUT DOWN OR UP. Now that Margin and adjusting the contract are out of the way.. We will see what happens.. This writer believes there will be a time to short the Bacon, but also feels the time is not now and may in fact not occur until the Fall after the August contract goes off the board…
We do however , recognize that a dip from this area is quite possible however , we also suggest that Belly Futures could well rocket to new highs…
FuturesCom Recommends that Hedgers refrain from selling the Bacon for now , lets wait and see if a price of 102 to 105 can be achieved, which we feel is more likely than not to occur...
In Addition BW Traders should Buy 1 May Belly at mkt on open Monday Morning , Premier Traders should stay tuned for a Flash…
A Ship in Harbor does not Sail
Happy Trading