Livestock Analysis (VIP) -- October 4, 2013

October 4, 2013 09:43 AM


Price action: Lean hog futures traded briefly on the negative side of unchanged but spent most of the day edging higher, closing near their daily highs. October futures closed up 55 cents and December futures finished 85 cents higher. Deferred contracts finished unchanged to 70 cents higher.

5-day outlook: The market continues to wait for hog numbers to rise, as indicated by the Quarterly Hogs and Pigs (H&P) Report. But so far those larger supplies have yet to appear. If numbers continue to run low, the cash market will be relatively stable as wholesale pork demand appears to be holding.

30-day outlook: A seasonal buildup in hog numbers has been slow to develop, raising speculation that disease losses from porcine epidemic diarrhea virus (PEDV) were understated in the H&P Report. The normal seasonal trend is for cash hog bids and wholesale pork prices to decline during the fall as supplies build.

90-day outlook: If the H&P Report is accurate, the normal seasonal pattern will occur again. However, if supplies continue to run short of those indicated in the report, prices will hold up better than normal. That, along with lower feed costs, could boost farrowing intentions for 2014, lifting sow prices in the short-term and dampening cash hog prices in 2014.

Hedgers: 50% of expected 4th-qtr. production is hedged in Dec. lean hog futures at an average price of $82.12 1/2.

Feed needs: 25% of 4th-qtr. protein needs are covered in long Dec. meal futures at $422.20 and 25% of 1st-qtr. needs are covered in long March meal futures at $410.80.



Price action: Live cattle futures settled 35 to 75 cents higher today to finish with slight weekly gains in all but the lead-month contract, which was slightly lower for the week.

5-day outlook: This week's price performance by futures in the face of disappointing cash cattle trade suggests traders' attitudes are strengthening. Therefore, followthrough buying could be seen next week, though traders' buying interest could be tempered if they sense cash cattle trade will be steady to lower again next week. While cattle supplies are tightening, packers are working with negative margins, which points to cash uncertainty next week.

30-day outlook: October is National Pork Month, but based on ads so far this month, retailers plan to prominently feature beef as they look to squeeze a little more out of the grilling season after a late start due to a cool, wet spring. The "extra" beef features may be just what the beef market needs from a demand perspective.

90-day outlook: Cattle supplies will continue to tighten, which paints a bullish price outlook. But the key to price strength lies with demand. Retailers have balked at Choice beef near $200, but if consumers start to accept gradual increases in beef prices, retailers should eventually be more active buyers at higher price levels.

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, but feeder cattle buyers should stay in touch to establish long coverage.

Feed needs: 25% of 4th-qtr. protein needs are covered in long Dec. meal futures at $422.20 and 25% of 1st-qtr. needs are covered in long March meal futures at $410.80.

Back to news


Spell Check

No comments have been posted to this News Article

Corn College TV Education Series


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!


Market Data provided by
Brought to you by Beyer