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Tuesday, 24 January 2017 12:21 Written by

Chinese companies turn to pig breeding by IFC Markets

Technical Analysis #C-LHOG : 2017-01-24

Chinese Beijing Dabeinong Technology and Liaoning Wellhope will invest 1 bn yuans ($146 mln.) in the project of pig feeds production. Will lean hog prices retreat?

National Statistics Bureau of China reported on Friday that national lean hog production fell 3.4% in 2016 compared to the previous year having reached the lowest since 2011 at 53mln tonnes. National production fell on higher rivalry from cheap imported pork. The demand from China has become one of the factors for global prices to surge 65% in recent 3 months. As we see, such advance in prices has pushed Chinese companies towards lean hog production ramp-up. In theory, this may push global prices lower. China consumes around 46% of global pork production. At the same time, it is self-sufficient with pork. China imports around 2.5% of its internal lean hog production or 1-1.3mln tonnes a year.

tech ifc markets 23 01 2017

On the daily chart LHOG: D1 is correcting after its surge. Lean hog prices have reached the support of the rising trend and the 200-day moving average. Further decline is possible in case of lower global demand.

The Parabolic indicator gives bearish signal.

The Bollinger bands have narrowed which means lower volatility.

The RSI is above 50 having formed negative divergence.

The MACD is giving bearish signals.

The bearish momentum may develop in case LHOG falls below the last fractal low, the 200-day moving average and the support of the rising trend at 65.3. This level may serve the point of entry. The initial stop-loss may be placed above the 6-mopnth high, the Parabolic signal and the last fractal high at 68.7. Having opened the pending order we shall move the stop to the next fractal high following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 68.7 without reaching the order at 65.3, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Summary of technical analysis

Position Sell
Sell stop below 65.3
Stop loss above 68.7

*Note

This overview has an informative and tutorial character and is published for free. All the data, included in the overview, are received from public sources, recognized as more or less reliable. Moreover, there is no guarantee that the indicated information is full and precise. Overviews are not updated. The whole information in each overview, including opinion, indicators, charts and anything else, is provided only for familiarization purposes and is not financial advice or а recommendation. The whole text and its any part, as well as the charts cannot be considered as an offer to make a deal with any asset. IFC Markets and its employees under any circumstances are not liable for any action taken by someone else during or after reading the overview.

Source: http://www.ifcmarkets.com

Read 151 times Last modified on Tuesday, 24 January 2017 12:21

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