Trading Hog Futures
The problem I am having at this point is the first scale that he is recommending is to start scaling lean hogs at 70 which is about the top third of the trading range.
I like the hogs and cattle least of all the commodities, they are the two that have almost no cost for the owners to take to market.
My favorite is orange juice, because when it hits around 60 then you start reading articles about how the growers can not cover the cost to pick the oranges off the trees and have them processed.
So they just leave the oranges on the trees and the price stays around 60 for a while then it starts going up. This is exactly what I am looking for a price that is a bottom where it just won't go much lower no matter what happens.
Well with hogs and cattle, there is no cost. None�
The farmer decided he does not want his hogs so he loads them in the back of his truck and drives them to market and sells them.
When he gets there they tell him the price has dropped to 40 cents per pound, he said that find I'll take it. Then he goes and gets another truck load of hogs and comes back,
They tell him the price is now 20 cents per pound, he says fine I will take it.
There is no bottom price where he won't sell his hogs, he does not want them so he just says fine I will take 10 cents a pound, then he goes and gets another truck load of them and sells them too.
This makes for some scary trading when you are trying to determine what the bottom price for the season is going to be.
And that is why I don't like hogs and cattle, but I am going to go ahead and enter the orders anyway, the newsletter only recommends buying 5 contracts so the losses will be limited if the farmers decided to start dumping hogs.
