EHedger Livestock Commentary 4/27/09

Published on: 17:46PM Apr 27, 2009
 
(866) 433-4371         [email protected]
 
 
Live Cattle
Feeder Cattle
Lean Hogs
LCJ9
86.15
-0.70
FCJ9
99.45
-0.30
LHK9
66.00
-3.00
LCM9
81.80
-0.80
FCK9
98.60
-0.525
LHM9
68.65
-3.00
LCQ9
82.30
-0.675
FCQ9
99.75
-0.60
LHN9
69.60
-3.00
 
Index
100.30
+0.19
Index
61.82
+0.72
 
 
Live Cattle:
 
  • April expires this Thursday the 30th
 
Live cattle closed lower on the day. However, today’s trade was not all that negative. Cattle gaped lower and traded very weak as a reaction to the fear and news coverage of swine flu. It quickly recovered and traded as much as 0.50 higher before turning lower. Yet, this is also what the financial markets did as well. Since lean hogs were still limit down late in the day the late sell in live cattle likely followed the path of least resistance and was aided by hog traders selling meats. Technically, the gap on the downside was filled and support will be found at contract lows. We believe $80-82 is undervalued in June and Aug. Yet, caution needs to be applied this week to see how far the overreaction will last towards the influenza and its affect on demand (reduced restaurant and export business). Midday wholesale beef was mixed with choice at 152.18 up 0.24 and select at 149.55 down 0.53. The slaughter was at 126,000, which is a solid Monday number while Saturdays kill was revised from 24,000 to 28,000 giving a new weekly total of 644,000. 
 
Boxed Beef Cutout Values
Choice
Select
Loads
152.14
+0.20
149.79
-0.30
264
Choice/Select spread settled at +2.36
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
126,000
125,000
128,000
 
 
               
 
Feeder Cattle: 
 
The feeder market closed lower today and traded similar to live cattle futures. April feeders, which expires Thursday the 30th should remain supported with the index still above $100. Cash feeders today were up to $2 lower in the Oklahoma City auction. The Joplin feeder auction saw lower prices for lightweight steers, yet steady for heavier steers that are priced into the CME index.   May feeders are still looking to fill this months gap lower at 97.80. Strong resistance still lies at the psychological figure of $100, then $100.55 (April’s high) and then $102.
 
 
Lean Hogs: 
 
Direct hog markets were mixed with the IA/So.MN direct market at $60.52 down 1.17; Western cornbelt $60.74 down 1.07; Eastern cornbelt $60.46 up .44; and the National average at $60.64 down .39.
 
Pork Carcass Cutout Values
 
 
Loads
59.75
+0.47
39.5
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
411,000
424,000
411,000
 
 
 
 
Lean hogs closed sharply lower finding limit down in most months. Last Friday, we briefly mentioned a news story about swine flu. By todays open this story had exploded into a major news story finding coverage on nearly every news channel. The pandemonium had already set in and was being blamed for nearly every commodity loss today. The stock market saw food and travel stocks trade lower and pharmaceutical stocks traded higher. It is unfortunate what fear will do to an already struggling hog market as the swine flu DOES NOT spread through pork itself. The name is the only strong association with swine. While, most importing countries reacted rationally, some (China and Russia) decided to halt pork imports. Yet these two countries have already greatly reduced their US pork imports for this year. For now the concern still remains on pork demand. Nearby months made new contract lows up until October. 
 
 
 
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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.