Livestock Analysis (VIP) -- September 20, 2013

September 20, 2013 10:02 AM


Price action: Lean hog futures posted slight to moderate losses to wrap up the day with nearbys leading losses. For the week, most contracts posted slight losses.

5-day outlook: Action to wrap up the week signals increasing ideas the hog market has put in a top and will soon return to a more seasonal downtrend as hog supplies expand. Monday's Cold Storage Report is expected to remind traders of ample pork supplies. But pressure should be limited by the wide discount futures hold to the cash hog index.

30-day outlook: Early expectations are that the Quarterly Hogs & Pigs Report will reflect expansion in the nation's pig crop, which, along with the seasonal downtrend, should keep the hog market pointed lower for the next few weeks as temps cool and hog supplies build.

90-day outlook: Pork and hog carcass values typically firm through the fall as hog slaughter stays at elevated levels and holiday buying gives the market a lift. This year, this could be even more pronounced as weekly hog slaughter data signals that the industry is just beginning to work through a hog supply reduced by the Porcine Epidemic Diarrhea Virus (PEDV).

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 finished slighlty higher ahead of this afternoon's Cattle on Feed Report. This week's price action, along with a bullish Cattle on Feed Report, suggests the market has posted a short-term low.

5-day outlook: Cattle futures should be supported by the Cattle on Feed data, as all three categories came in on the bullish side of the pre-report guesses. Buying interest will be limited unless the cash and product markets show strength, however.

30-day outlook: The cash cattle and boxed beef markets should firm this fall as market-ready cattle supplies continue to tighten, which should in turn support cattle futures. But for the market to show the kind of strength the tight supply situation suggests, there must be a pickup in demand. Thus far, retailers have been reluctant to actively buy beef with Choice values near record highs for fear consumers will reject higher retail prices.

90-day outlook: The downward trend in cattle placed into feedlots is likely to continue moving forward as calf supplies are tight. Tightening calf supplies suggest feeder cattle prices are headed higher, though it will take strong demand for feeders in conjunction with the tight supplies to fuel a sharp rally in feeder cattle prices.

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