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Frozen Pork Bellies Trading
Pork Bellies Trading Defined and ExplainedPork bellies refer to the cut of pork meat obtained from the underside of a hog carcass used for bacon. Frozen pork belly futures contracts (bacon in storage) are influenced by factors that affect the supply and demand for hogs, other pork products and competing meats. Trading Frozen pork belly futures contracts perform the same two primary functions common to many futures contracts – guiding inventories and establishing forward pricing. Frozen Pork Bellies InvestingInvesting in pork bellies is not for the faint of heart unless you have the benefit of either deep pockets or knowledge of the industry. Trading in frozen pork bellies contracts developed as a risk management device to meet the needs of meat packers and meat distributors who have to contend with volatile hog price swings. Frozen Pork Bellies Trading Prices / RatesA frozen pork belly futures contract consists of 40,000 pounds of frozen pork bellies, cut and trimmed, where 1 point = $.0001 per pound ($4.00). Historically, wide price swings are not unusual in trading pork belly futures, where trading has been accentuated by speculative interests in the past but do not trade in the large size volume as they once did.
Frozen Pork Bellies Trading StrategyThere are definite seasonality aspects for pork bellies production and trading. Pork bellies are storable, and the movement into cold storage builds early in the calendar year, peaking about mid-year. Net withdrawals from storage then carry stocks to a low around October. There is no pork belly futures contract for the months between August and February because storage is not a large factor during that period. Demand for pork products in general tends to increase around the winter and Easter holiday season, and no matter what production practices are used, this seasonal demand by consumers still affects the pace of hog slaughter and both cash and futures pricing of pork including pork bellies. Although management methods have improved to keep a constant, year-round supply of hogs, demand side factors still play an important role in pricing in the hog industry. Few commodities offer the profit potential and market action of trading frozen pork belly futures. However, with great profit opportunity often comes risk, and the trading of frozen pork belly futures remains the domain of aggressive, highly speculative individual traders.
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* VantagePoint's accuracy statistics were computed on out-of-sample price data utilizing neural networks trained on both single market and intermarket data and relate to the Neural Index which indicates whether the average of tomorrow’s typical price and the typical price of the day after tomorrow (both unknowns at this time) are expected to be higher or lower than the average of yesterday's typical price and the typical price of the day before yesterday. The numerical value of the Neural Index, either a one (1) or a zero (0) thereby indicates whether or not the trend direction is expected to be higher or lower for each target market over the next two days. A Neural Network accuracy statistic of 80% does not mean that eight out of ten trades will be winning trades. VantagePoint is not a trading system that gives the same specific buy and sell signals to all users. It is a technical forecasting tool that is comprised of proprietary forecasting indicators that apply neural networks to market data for the purpose of finding patterns and relationships between markets and then using this information to make futuristic forecasts. Using these indicators each trader determines his or her own entries, exits and stop placements which may vary from those of other traders due to differences among traders in trading style, objectives, risk propensity, account size and number of contracts involved, thereby producing different trading results from one trader to another. Futures and options trading involves risk, is not for every trader, and only risk capital should be used. For more detailed information, please read our Important Disclaimer, Privacy Policy, and Software License Agreement. |
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