Cattle Hogs recover; Pork cut out higher
Sep 08, 2010
|
CME Live Cattle
|
CME Feeder Cattle
|
CME Lean Hogs
|
|
Oct
|
97.25
|
+0.90
|
Sept
|
112.10
|
+0.17
|
Oct
|
76.30
|
+0.70
|
|
Dec
|
99.70
|
+1.00
|
Oct
|
112.42
|
Unch
|
Dec
|
74.25
|
+0.70
|
|
Feb
|
101.12
|
+1.05
|
Nov
|
113.42
|
+0.02
|
Feb
|
77.85
|
+1.17
|
|
|
Index
|
113.67
|
-0.08
|
Index
|
81.44
|
-0.51
|
Live Cattle:
TX 97.00-98.00; KS 97.00-97.50; 154.00; NE 152.00-154.00, 97.00-98.00; CO 97.00-98.00; IA 151.00-152.00 in active trade; USDA est 97,000 hd.
USDA wkly comp box beef exprt solid at 779 lds vs. 811 yr ago ; LW holiday low 476
NEW DROP CREDIT HIGH 10.97
Midday box beef 161.98 (+0.23) 156.14 (+0.23) 200 lds
Live Cattle:futures settled higher as cash trades steady to 2.00 higher, midday beef up .23 on good volume of 200 loads. Early COF Est have August Marketings 2-4 % above placement; Keep in mind overall avaiable feeder number are smaller. Light cash trade in IA was reported at 151-152.00. ; remember spot futures will move to the lowest delivery point. Today's box volume was good and possibly sparked packers to up their bids today. This week's out-front sale are positive but seasonally as a percent of wkly volume, sales to drift lower into thanksgiving. The trade is positioned for a well publicized break in demand. Forward sales for mid Sept delivery are good combined with the packers short term approach will provide opportunities like today, as we mentioned the next few wks will be very exciting .
Looking Ahead:Post Labor Day factors-Oct/Dec roll will be in high gear (asset funds moving longs to Dec contract. Bear side- mid month without new highs, trend following and manage money will more than likely stay on the sidelines. Choice/select spread continues to erode (sub 6.00 ??); and Northern plains are willing sellers. Bull side- Packer short on purchases, out-front sales should keep slaughter good; firming stock market leading into elections. Packer profitability remains good and weekend clearance appears to be good resulting cash bids 1-2.00 higher. Today's bounce from Tuesday's trade still leaves futures lower on the week and the majority of this wks packer activity is now behind us. For the balance of this week into next look for Oct and Dec futures to trend lower and retest the 40 day ma (98.00 Dec)
Hedge Recs: take fall production up to 75-80% hedge, look for post labor day break as demand struggles from consumer push back. Look to cover Oct hedges 94.00-95.00 area.
|
USDA Boxed Beef Cutout Values
|
|
Choice
|
Select
|
Loads
|
|
161.47
|
-0.28
|
155.44
|
-0.47
|
301
|
|
Choice/Select spread @ 6.03
|
Drop Cr.
|
10.97 (+0.14)
|
|
Slaughter
|
Wk Ago
|
Yr Ago
|
WTD
|
Yr Ago
|
|
131,000
|
130,000
|
130,000
|
265,000
|
262,000
|
* Prior days quote
Feeder Cattle:
Cash trends lower off futures prices
Weekly volume continues to improve heading into harvest.
Feeders settled with only modest gains after Tuesday's sharply lower close. Corn and cost of gains combined with increased seasonal volumes continue to press feeders against long term technical support. While local auction market are reflective of higher corn prices. USDA quoted Tuesday's auctions 2.00-3.00 lower with majority 6 weight or higher. Current corn prices moving higher and counter seasonal this will continue to soften feed yard demand until buyers are confident higher corn prices will support higher differed fed cattle. We have adjusted our support level to 111.50-112.00 bases Sept.
World feed grain demand is very strong. Continue to keep your feed needs covered.
|
USDA Pork Carcass Cutout Values
|
Load vol.
|
|
Cutout
|
90.94
|
+0.47
|
87.80
|
|
Slaughter
|
Wk Ago
|
Yr Ago
|
WTD
|
Yr ago
|
|
422,000
|
413,000
|
432,000
|
843,000
|
868,000
|
|
National Live Trade Wtd. Px
|
Net
|
Vol.
|
|
National
|
79.18
|
+0.12
|
14480
|
|
IA/Minn
|
80.42
|
+0.16
|
5159
|
|
W. Cornbelt
|
80.21
|
+0.28
|
6329
|
|
E. Cornbelt
|
79.15
|
+0.97
|
6715
|
|
|
|
|
|
Lean Hogs:
IA/MN wkly weights 266.7 up 1.1 from lw 265.6; 267.4 yr ago.
Packer margins remain well ahead of 5 yr trend @ plus 5-8 /hd.
Midday product quoted remain seasonally weak
Lean Hogs- Settled higher as futures bounce back from Tuesday's break. Futures continue to focus toward seasonal lower trends in cut-out. Packer margins are very strong and remain well above the 5yr average. Active Oct/Dec spreading was noted. The real question has record prices had an effect on demand yet? Production weights are starting to rebound from the summer lows so when will total production force a rebalancing of record prices. Since mid June futures have been within a $4.00 range. Pork product has come under pressure partially in the "summer cuts". Low inventories should lend support to product values as seasonally lower trends try to take hold. Bottom line Oct futures continue to hold a wide discount ...this will not last.
Looking Ahead: Bearish concerns- trade will expect the index to drift lower, Mid month may limited over all buy side interest; Sept pig crop should show producer consolidation is over and possibly even show some expansion as producer profitability improves. Bullish factors-Futures are technically over-sold. pork product holds; production slow to recover due to late summer heat. Export demand improves due to world production problems. Packer margins remain very strong, how much of this is export driven vs. lower slaughter capacity against current production. We have all seen the effects of production out pacing slaughter capacity. Buy Oct sell Dec @ 1.60, stop close @ 1.10; Exit 3.20
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.
