Lean Hog/Corn Spread
The IMC blog initiated a hypothetical short position in the August-September hog/corn spread at +$14,312.50 (premium hogs) on June 3rd. After the break below the March 23rd low of +$9,635, we adjusted our exit criteria to liquidate the spread on a two-consecutive day close back above this price.
The exit signal was triggered at today’s close of +$10,025. This knocked the position out with a respectable profit of +$4,287.50, not including commissions.
Now that we’re on the side lines, we will be monitoring the hog/corn spread for the December contracts and further out. We’ll sit up and pay close attention if we see a rally to +$15k or higher, or if we see a drop to ‘even money’ or lower. Let the novice trade the ‘no man’s land’ in between. We are only interested when there’s a high-probability situation.