Cattle Supplies Shrinking

January 29, 2009 06:00 PM
 
 

Julianne Johnston Pro Farmer Senior Markets Editor


From Pro Farmer

Updated as of 7:00 a.m. CT

Cattle supplies tightening, but demand concerns continue... Traders will be wrapping up their position squaring today ahead of this afternoon's Cattle Inventory Report, scheduled for release at 2:00 CT. Traders look for most categories to come in below year-ago levels, reflecting contraction in the industry. 

Semiannual Cattle Inventory Report Expectations

Avg. trade guess

Range

% of year-ago

All cattle & calves

99.2

98.9-99.6

Cow/heifers that have calved

99.1

97.8-99.6

Beef cows

98.8

98.5-99.4

Dairy cows

100.0

98.7-101.3

Heifers 500 pounds and over

99.2

98.0-99.7

Beef replacement heifers

97.7

96.1-98.6

Milk replacement heifers

98.3

96.5-99.3

Other heifers

100.6

99.7-101.5

Steers 500 pounds and over

99.3

98.2-100.0

Bulls 500 pounds and over

99.2

98.0-99.9

Calves under 500 pounds

99.0

97.5-99.9

2008 Calf Crop

99.3

97.7-99.7

Because of continued demand concerns amid the ongoing economic recession, the prospects of tightening supplies is only helping to limit downside risk -- for now.

Make sure you check "Leading Edge Reports" following the report release for full details and analysis.

Keep your comments coming. Always good to have conversation with you and input on what you'd like to talk about. E-mail your comments/question to me by clicking here. Please include your location.


Opening calls. These calls originate more than three hours before the open -- use caution, things change:

Corn: 2 to 4 cents lower. Futures were weaker overnight on spillover from yesterday's losses. Futures closed mostly around 2 cents lower yesterday, with losses limited by a strong weekly export sales report. March corn posted an inside day of trade on the charts. Near-term support lies at the January low of $3.58 3/4, while resistance lies at the mid-January high of $4.07.

Soybeans: Steady to 2 cents higher. Futures were firmer overnight on firmness in the crude oil market. Futures closed mostly around 11 to 12 cents lower yesterday, pressured by outside markets and the weekly export sales report. Price action could be choppy today as traders close their books for the month. But it's apparent that traders are more willing to add short positions than long positions as they fear a "February break" is looming.   Support for March soybeans lies at the January low of $9.57 3/4.

Wheat: 1 to 2 cents lower. Futures were weaker overnight on firmness in the dollar. Futures were under pressure throughout the day yesterday, with Chicago closing mostly 16 to 17 cents lower -- and near session lows. A poor weekly export sales report and strength in the dollar has traders concerned about demand. Focus in the market today will be on closing books for the first month of the year, which could result in choppy price action. 


Cash cattle expectations: Trade at $80 to $80.50. Cash trade is expected to turn active in Texas at similar levels to Kansas trade -- around $80.00. Beef values were lower again yesterday, which has traders concerned about additional cash deterioration next week. Choice beef values dropped $2.46 yesterday and are nearing levels in the past that have spurred strong demand. Movement was strong at 240 loads yesterday, which is a positive sign.

Futures call: Mixed. Price action is expected to be choppy as traders even positions for this afternoon's Cattle Inventory Report. Yesterday, April live cattle penetrated support to post a new weekly low before returning back above that level. Next support is the early December contract low of $82.45.

Cash hog expectations: Steady, mixed undertones. The cash hog market is expected to finish the week steady, with mixed undertones expected as some packers are short-bought due to this week's winter weather, but others are working on improving negative profit margins. Pork cutout slipped 62 cents yesterday, which adds to packers' desire to improve profit margins.

Futures call: Mixed. Futures are called mixed amid spreading, with downside risk limited for nearbys as they hold a discount to cash. April lean hog futures spent yesterday pivoting around support at the previous day's low, but overall posted a narrow daily range. Contract-low support lies at $60.60.


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