Cattle higher/ Hogs mixed in light trade
Sep 01, 2010
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CME Live Cattle
|
CME Feeder Cattle
|
CME Lean Hogs
|
|
Oct
|
97.75
|
+0.47
|
Sept
|
113.87
|
-0.22
|
Oct
|
74.95
|
-0.20
|
|
Dec
|
100.60
|
+0.55
|
Oct
|
114.85
|
-0.25
|
Dec
|
72.87
|
-0.40
|
|
Feb
|
101.07
|
+0.47
|
Nov
|
115.27
|
-0.42
|
Feb
|
75.92
|
+0.12
|
|
|
Index
|
114.47
|
-0.26
|
Index
|
83.34
|
-0.55
|
Live Cattle:
TX trades 97.00; NE 153.00; 97.00-96.00; CO 97.00; KS 97.00; IA 151.00-152.00 USDA Vol- 50 K
Show list up slightly
Midday box beef 163.03 (-0.61) 157.08 (+0.20) 110 lds
Live Cattle:futures settled higher as fresh outside money flow and outside markets. Cash traded a full 2.00 lower today, with IA posting 151.00 trades. Granted, IA is far from the apex of the fed cattle trade; but with Worthing, SD a delivery point; futures will converge to the lowest deliverable market price. We continue to believe the packer will take a wait and see approach following the long weekend, which can increase the volatility if surprises come. The trade is positioned for a well publicized break in demand...What if box beef prices hold on good volume, exports hold +10% of wkly volume. Don't forget forward sales for mid Sept are good. As we mentioned the next few wks will be very exciting.
Looking Ahead:Oct/Dec is off to a good start with active Oct/Dec spread volume materializing in the last hour of trade. Friday's deliveries offer a gentle reminder to the long speculator...don't own Oct if it is a premium to cash; you might end up with a load or two in Worthing, SD. As we look ahead, the market has priced a negative September demand picture, increasing supply and for the moment, reminded the long speculator premiums in Oct Futures can be expensive. Today's low hit our Oct live cattle objective. Keep in mind the next few weeks "logistical" noise will be a factor. The trade has positioned itself for flat to lower box beef prices, and softer packer bids as market ready cattle supply improves. Pre-roll over begin, Oct open int 162,787 vs. 109,878 ly and historically futures gain 1.00 on cash.
Hedge Recs: take fall production up to 75-80% hedge, look for post labor day break as demand struggles from consumer push back.
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USDA Boxed Beef Cutout Values
|
|
Choice
|
Select
|
Loads
|
|
162.62
|
-1.02
|
156.86
|
-0.02
|
191
|
|
Choice/Select spread @ 5.76
|
Drop Cr.
|
10.81 (-0.01)
|
|
Slaughter
|
Wk Ago
|
Yr Ago
|
WTD
|
Yr Ago
|
|
130,000
|
130,000
|
129,000
|
390,000
|
388,000
|
|
|
|
|
|
|
* Prior days quote
Feeder Cattle:
Sept basis adjustment takes hold.
Corn prices have sent cattle buyers to sharpen their pencils. Today's corn market finished 7.5 cents higher pressing nearby feeders lower. Grass cattle is beginning to move, look for volumes to push higher and prices to stay defensive with corn prices hovering 4.50 basis Chicago Dec. We had previously called for 113.00 area to hold Oct feeders...With current corn prices moving higher and counter seasonal this will continue to soften feed yard demand until confidence the live market returns. We have adjusted our support level to 111.50-112.00 bases Sept. The Corn market has started to focus on yield and production for the moment allowing some input cost relief. Please don't take this as a sign to go hand to mouth, world feed grain demand is very strong. Continue to keep your feed needs covered.
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USDA Pork Carcass Cutout Values
|
Load vol.
|
|
Cutout
|
90.73
|
-0.50
|
95.30
|
|
Slaughter
|
Wk Ago
|
Yr Ago
|
WTD
|
Yr ago
|
|
413,000
|
413,000
|
431,000
|
1221,000
|
1299,000
|
|
National Live Trade Wtd. Px
|
Net
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Vol.
|
|
National
|
76.91
|
-1.57
|
8622
|
|
IA/Minn
|
77.92
|
-1.34
|
1916
|
|
W. Cornbelt
|
77.81
|
-1.28
|
2852
|
|
E. Cornbelt
|
77.19
|
-0.37
|
4870
|
Lean Hogs:
IA/MN 265.6 lightest for this marketing yr.
Tuesday Hag Slaughter revised lower to 397,000
Moderate to good product volume
Lean Hogs- Settled mixed off pre roll positing; volume was light ahead of the three day weekend. Futures remain poised for lower trade next wk...I guess the real question will be has demand back off enough or supply increased to warent lower prices. This wks weekly Ia/mn posted a marketing yr. low; weights will improve; though futures are expecting this to have started. More or less, futures remain in a $4.00 trading range established @ the beginning. Pork product remains tightly traded as the trade is positioned for the fall break; load counts have improved on lower values.
Looking Ahead: We anticipate "month End" positioning to be supportive next holding Oct near the 100 day ma. Pre- holiday expectations for cash and pork product to seasonally break will remain a factor for several wks. The discount Oct holds to cash should lend some support following the holiday.
Hedgers don't let profitable opportunities pass bye. Be prepared to sell new contract highs on up to 80% of your Q3 2010 to -Q2 2011 production.World feed grain demand is very strong, continue to keep your feed needs covered.
Please give us a call, become part of an elite ag risk management team.
Best regards,
Paul Nelson
866-433-4371
Toll Free
EHedger
141 West Jackson Blvd.
Suite 1520A
Chicago, IL 60604
Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. The market information contained in this message has been obtained from sources believed to be reliable, but is not guaranteed as to its accuracy or completeness. Market information may not be consistent with current or future market positions of EHedger, its affiliates, officers, directors, employees, or agents. Recipients assume the risk of reliance on and indemnify and hold EHedger, Paul Nelson harmless for any and all losses, costs, or tax consequences incurred as a result of their use of market information.
