EHedger Livestock Commentary 4/13/09

Published on: 18:09PM Apr 13, 2009
 
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Live Cattle
Feeder Cattle
Lean Hogs
LCJ9
87.725
+0.200
FCJ9
98.925
+0.775
LHJ9
58.200
+0.200
LCM9
84.800
+0.200
FCK9
99.800
+0.875
LHK9
73.000
-0.450
LCQ9
85.350
+0.075
FCQ9
101.500
+0.600
LHM9
74.150
-0.125
 
Index
97.06
+0.17
Index
57.16
-0.13
 
 
Live Cattle: 
 
Live cattle opened weak, yet managed to close unchanged to slightly lower. It was a non-eventful trade as volume was light. Last week we saw impressive gains in futures and the cash market, yet some believe this to be overdone for now. Futures recovered for the day as the financial markets and crude oil worked higher from sharply lower levels. Midday wholesale beef prices were higher on the day with choice at 140.18 up 1.15 and select at 140.11 up 1.56. The slaughter was at 113,000, a weak slaughter compared to a year ago.
 
 
 
Boxed Beef Cutout Values
Choice
Select
Loads
139.03
+1.07
138.55
+0.91
260
Choice/Select spread settled at +0.48
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
113,00
112,000
126,000
 
 
               
 
Feeder Cattle: 
 
The feeder market closed higher on the day on light volume. Similar to live cattle, feeders turned around thanks in part to outside markets recovery midday. However, feeders appeared to trade differently than live cattle. While lower early, futures seemed to show strength and managed to close near the highs of the day. Optimism is surrounding the feeder market with ideas that beef demand will continue to push higher and the economy will continue to improve.   
 
Lean Hogs: 
 
Direct hog markets were mixed with the IA/So.MN direct market at $55.46 down .64; Western cornbelt $55.69 down .31; Eastern cornbelt $54.57 up 1.38; and the National average at $55.20 up .06. 
 
Pork Carcass Cutout Values
 
 
Loads
59.48
+0.54
9.3
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
290,000
415,000
433,000
 
 
 
Lean hogs closed mixed with strength in April and weakness in the deferred. April hogs expire on Wednesday and still carry a $1 premium over the index. Our concern looking forward is the premium June has to cash. Many are looking for cash to push sharply higher and close the difference. However, even with a sharp cash rally futures will have a difficult time pushing higher and thus keeping the premium at current levels. Therefore, the summer months may fall into a trading range and find sellers on rallies.
The slaughter was at 290,000 showing an exceptionally weak number. If kills remain this low then on a supply basis, it could reinforce belief that prices can reach the low 70’s before June.
 
 
 
 
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EHedger LLC
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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.