Cattle lower on demand concers- Hogs hold firm tone
Aug 31, 2010
|
CME Live Cattle
|
CME Feeder Cattle
|
CME Lean Hogs
|
|
Oct
|
97.27
|
-0.77
|
Sept
|
114.10
|
-1.00
|
Oct
|
75.15
|
+0.27
|
|
Dec
|
100.05
|
-0.60
|
Oct
|
115.10
|
-0.82
|
Dec
|
73.27
|
+0.52
|
|
Feb
|
100.60
|
-0.67
|
Nov
|
115.70
|
-0.75
|
Feb
|
75.80
|
+0.70
|
|
|
Index
|
114.73
|
-0.31
|
Index
|
83.89
|
-0.47
|
Live Cattle:
NE, trades 97.00; CO 97.00-97.50 in light trade
Show list up slightly
Midday box beef 164.06 (+0.32) 157.29 (-0.33) 91 lds
Aug Expired 97.25
MTD deliveries 37 loads
Live Cattle:futures settled lower as concerns mount over upcoming beef clearance; both this weekend (east coast hurricane) and following weeks, add on Friday's deliveries sent the long speculator looking for the door ahead of the holiday weekend. 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.
|
USDA Boxed Beef Cutout Values
|
|
Choice
|
Select
|
Loads
|
|
163.64
|
-0.10
|
156.88
|
-0.74
|
167
|
|
Choice/Select spread @ 6.76
|
Drop Cr.
|
10.82 (+0.02)
|
|
Slaughter
|
Wk Ago
|
Yr Ago
|
WTD
|
Yr Ago
|
|
130,000
|
128,000
|
130,000
|
260,000
|
259,000
|
|
|
|
|
|
|
* Prior days quote
Feeder Cattle:
Sept basis adjustment takes hold.
Corn prices have sent cattle buyers to sharpen their pencils. Corn harvest about to get on its way in the north may keep some of the would be bidder's busy, softening demand for a moment at the sale barns. Overall cash market should remain well support but 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.
|
USDA Pork Carcass Cutout Values
|
Load vol.
|
|
Cutout
|
91.23
|
-2.03
|
115.25
|
|
Slaughter
|
Wk Ago
|
Yr Ago
|
WTD
|
Yr ago
|
|
408,000
|
405,000
|
435,000
|
819,000
|
868,000
|
|
National Live Trade Wtd. Px
|
Net
|
Vol.
|
|
National
|
78.50
|
+0.26
|
10736
|
|
IA/Minn
|
79.36
|
+2.03
|
5735
|
|
W. Cornbelt
|
79.18
|
+1.80
|
6230
|
|
E. Cornbelt
|
77.56
|
-1.33
|
4506
|
Lean Hogs:
Cutout lower led by ribs dn 9.12 (123.51); loins dn 7.15 (97.30) Butt -5.20 (76.62)
Lean Hogs- Settled higher as month end positioning lent support. A test of the moving averages added a technical push. A question ahead for us all, will be have prices moved high enough to slow demand. More or less, futures remain in a $4.00 trading range established @ the beginning. Oct/Dec roll over was active with estimated 3000 contracts traded on the spread. Pork product remains tightly traded as the trade is positioned for the fall break.
Looking Ahead: We anticipate "month End" positioning to be supportive early next week, 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.
