Livestock Analysis (VIP) -- November 2, 2012

November 2, 2012 09:32 AM
 

Hogs

Price action: Lean hog futures closed 12 1/2 to 60 cents lower in all but some of the far-deferred contracts today and lower for the week.

5-day outlook: With lean hog futures finishing just above this week's lows, there's risk of heavier price pressure next week if support is violated. Fundamentally, the cash hog market is likely to favor the downside next week as market-ready supplies are plentiful and packers should have no problem securing needs.

30-day outlook: There are concerns meat demand will suffer as the East Coast recovers from Superstorm Sandy. But action in the pork product market so far has not signaled a letup in demand. In fact, retailer buying picked up this week, although some of that was likely preparations ahead of the upcoming holiday season.

90-day outlook: Hog numbers will remain hefty through the end of the year. As the calendar flips to 2013, supplies should start to gradually ease, although there won't be a noticeable change in hog numbers until the end of the first quarter.

Hedgers: Carry all risk in the cash market for now.

Feed needs: 50% of remaining 4th-qtr. protein needs are covered in long Dec. meal futures at $487.10 and 25% of expected 1st-qtr. needs are covered in long March meal futures at $468.50. Carry all corn-for-feed risk in the cash market for now.

 

 

Cattle

Price action: Live cattle futures posted slight losses in most contracts for the week, with December ending slightly higher. Price action was highly choppy this week, reflecting traders' uncertainty toward demand.

5-day outlook: Boxed beef values pulled back sharply this week, raising concerns Superstorm Sandy has disrupted beef demand along the East Coast. While that is likely the case, it's only part of the reason beef prices slipped; Choice values reached record levels last week and were "due" for a correction. The cash cattle market held up well this week and was steady to $1 lower in the face of the sharp drop in beef values due to continued tight supplies.

30-day outlook: While tight market-ready supplies will continue to limit downside price risk, price action is likely to remain choppy as the boxed beef market searches for a price consumers will accept while rationing tight supplies. Beef features will also become more regular around the holidays, which favor higher-quality cuts and add overall value to the cutout market.

90-day outlook: Cattle supplies will continue to tighten into 2013 and possibly 2014 if pasture conditions improve and producers finally begin to hold heifers back to rebuild the herd. As a result, cash cattle trade in the $130-per-cwt. range should become a regular occurrence in 2013.

Hedgers: Fed cattle producers should carry all risk in the cash market for now. Feeder cattle sellers and buyers should also carry all risk in the cash market for now.

Feed needs: 50% of remaining 4th-qtr. protein needs are covered in long Dec. meal futures at $487.10 and 25% of expected 1st-qtr. needs are covered in long March meal futures at $468.50. Carry all corn-for-feed risk in the cash market for now.

 

Hogs

Price action: Lean hog futures closed 12 1/2 to 60 cents lower in all but some of the far-deferred contracts today and lower for the week.

5-day outlook: With lean hog futures finishing just above this week's lows, there's risk of heavier price pressure next week if support is violated. Fundamentally, the cash hog market is likely to favor the downside next week as market-ready supplies are plentiful and packers should have no problem securing needs.

30-day outlook: There are concerns meat demand will suffer as the East Coast recovers from Superstorm Sandy. But action in the pork product market so far has not signaled a letup in demand. In fact, retailer buying picked up this week, although some of that was likely preparations ahead of the upcoming holiday season.

90-day outlook: Hog numbers will remain hefty through the end of the year. As the calendar flips to 2013, supplies should start to gradually ease, although there won't be a noticeable change in hog numbers until the end of the first quarter.

Hedgers: Carry all risk in the cash market for now.

Feed needs: 50% of remaining 4th-qtr. protein needs are covered in long Dec. meal futures at $487.10 and 25% of expected 1st-qtr. needs are covered in long March meal futures at $468.50. Carry all corn-for-feed risk in the cash market for now.



Cattle


Price action: Live cattle futures posted slight losses in most contracts for the week, with December ending slightly higher. Price action was highly choppy this week, reflecting traders' uncertainty toward demand.

5-day outlook: Boxed beef values pulled back sharply this week, raising concerns Superstorm Sandy has disrupted beef demand along the East Coast. While that is likely the case, it's only part of the reason beef prices slipped; Choice values reached record levels last week and were "due" for a correction. The cash cattle market held up well this week and was steady to $1 lower in the face of the sharp drop in beef values due to continued tight supplies.

30-day outlook: While tight market-ready supplies will continue to limit downside price risk, price action is likely to remain choppy as the boxed beef market searches for a price consumers will accept while rationing tight supplies. Beef features will also become more regular around the holidays, which favor higher-quality cuts and add overall value to the cutout market.

90-day outlook: Cattle supplies will continue to tighten into 2013 and possibly 2014 if pasture conditions improve and producers finally begin to hold heifers back to rebuild the herd. As a result, cash cattle trade in the $130-per-cwt. range should become a regular occurrence in 2013.

Hedgers: Fed cattle producers should carry all risk in the cash market for now. Feeder cattle sellers and buyers should also carry all risk in the cash market for now.

Feed needs: 50% of remaining 4th-qtr. protein needs are covered in long Dec. meal futures at $487.10 and 25% of expected 1st-qtr. needs are covered in long March meal futures at $468.50. Carry all corn-for-feed risk in the cash market for now.

 

Back to news


Comments

 
Spell Check

No comments have been posted to this News Article

Corn College TV Education Series

2014_Team_Shot_with_Logo

Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!

Markets

Market Data provided by QTInfo.com
Brought to you by Beyer
Close