EHedger Closing Livestock Commentary 9/10/09

Published on: 18:18PM Sep 10, 2009
 
(866) 433-4371         [email protected]
 
 
Live Cattle
Feeder Cattle
Lean Hogs
LCV9
87.225
-0.325
FCU9
99.50
-0.30
LHV9
52.425
+0.975
LCZ9
87.15
-0.275
FCV9
99.775
-0.45
LHZ9
50.70
+1.05
LCG0
88.075
-0.125
FCX9
100.35
-0.675
LHG0
56.975
+0.75
 
Index
98.81
+0.18
Index
51.04
+0.34
 
 
Live Cattle: 
 
Live cattle closed lower on the day and traded mixed. October showed the most losses as longs rolled into December. Cattle did trade higher from spillover hog strength, but the lower boxed beef and futures premium were selling points for live cattle futures. Midday boxed beef was higher with Choice at 142.39 down .30 and Select at 133.83 down 0.64. 
 
Technicals are turning up to encourage buying, but the futures premium will limit upside potential. No cash sales yet to report. Showlists are mixed with increases in Kansas and Nebraska, but decreases in Colorado and the Panhandle. Bids are currently 82 and 83, while asking prices are mostly 86 and 87. This week’s slaughter scheduled will be distorted due to the Labor Day holiday. The futures market needs to find some direction from the cash market or beef movement to break out from these levels.
 
 
 
 
Boxed Beef Cutout Values
Choice
Select
Loads
141.95
-0.74
133.96
-0.51
331
Choice/Select spread settled at +7.99
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
129,000
129,000
127,000
391,000
509,000

 
Feeder Cattle: 
 
Feeders closed lower on the day. Today’s action seemed to be consolidation from the strong gains seen the past week. The closing prices were below yesterday’s opening prices, so a mixed choppy market should be expected to finish the week. October call option open interest lies heavily in the 100-strike price and then above, while the 100 and 96 put have large open interest. This is suggesting a range for October between 96-102.
 
This Friday is the next release of the monthly USDA supply/demand and crop production report concerning grain outlooks. As mentioned before corn’s outlook remains weak, especially with yield talks continuing to increase. These conditions look to stay in place into harvest. While this is a supporting factor, feeder cattle continue to focus on live cattle prices. Long term outlooks for prices are favorable because cattle numbers remain near historic lows.  
 
Lean Hogs: 
 
Direct hog markets were mixed with the IA/So.MN direct market at $50.48 down .60; Western cornbelt $50.78 down .33; Eastern cornbelt $46.83 up .79; and the National average at $49.67 down .06
 
Pork Carcass Cutout Values
 
 
Loads
55.07
+0.92
68.5
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
432,000
431,000
429,000
1.295
1.724
 
  • Pork cutout; loins +3.69, hams –2.38
  • IA/MN hog weights 267.4 lbs. vs. 267 wk ago and 259.4 yr ago
  • Pork bellies sharply higher
 
Lean hogs closed higher on the day. It was an erratic and volatile trade from the beginning of the day as futures prices are at a pivotal area. This morning the USDA announced they will make additional purchases of pork for the school lunch and other food/feeding programs when the new fiscal year begins in October. This inspired fund buying, which triggered many buy stops related to several key technical areas including the 50-day moving average. Hog open interest in at its highest level (143,662) since May of this year, but well off the historic highs (256,835) seen in June of 2008. October settled above its 50-day moving average, while December traded, but settled just below that figure. A big factor to for the next several sessions will be money flow. Will these levels initiate new fund buying or will funds that are short attempt to pressure the market back lower and protect their position? Fundamentally cash hogs have been performing well and the CME index has been moving higher to encourage further buying. In addition, the dollar is near 1-year lows and is encouraging ideas of better exports ahead along with general commodity buying. An ongoing issue will be supply vs. demand post Labor Day. Hog weights increased from a week ago and Saturday’s slaughter will be large to make up for Monday’s closed plants. Ideal weather and cheap feed ingredients have continued to keep weights high. Recent cutout strength has been from loin prices rather than ham prices, which led the rally from the lows. Ham prices as of today are just above $40.  
 
Go to www.ehedger.com/sign-up/ for a free two-week trial that includes our hedging recommendations, trades of the day, market recaps or to simply open an account. 
 
You can also contact us at 866-433-4371, or by sending us an email to [email protected]
 
 
Regards,
EHedger LLC
141 West Jackson Blvd.
Suite 1520A
Chicago, IL 60604
1-866-433-4371 Office
 
Trading commodity futures involves substantial risk of loss and may not be suitable for all investors. The recommendations express opinions of the author. The information they contain is obtained from sources believed reliable, but is in no way guaranteed. The author may have positions in the markets mentioned including at times positions contrary to the advice quoted herein. Opinions, market data, and recommendations are subject to change at any time.