EHedger Livestock Commentary 5/08/09

Published on: 17:15PM May 08, 2009
 
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Live Cattle
Feeder Cattle
Lean Hogs
LCM9
82.975
+0.95
FCK9
99.35
+1.15
LHK9
61.125
+1.925
LCQ9
83.60
+1.075
FCQ9
100.70
+1.625
LHM9
68.20
+1.425
LCV9
87.975
+0.875
FCU9
100.65
+1.425
LHN9
70.775
+1.325
 
Index
99.71
+0.20
Index
55.67
-0.74
 
 
Live Cattle: 
 
·        KS trades 84 live
·        Saturday’s estimated slaughter is 20,000 head.
 
Live cattle closed higher on the day and on the week. June cattle bounced from yesterday’s support area and traded up to $1.50 higher before settling near the 40-day moving average of 82.82 and the 20-day average around 83. Early strength looked to be a function of funds buying, as generally all commodity markets were firm today. Cash traded today in Kansas at $84 and was very active yesterday at the same price. While this price is $1 lower than a week ago the discount was enough to encourage buyers. The bearish news this week of lower boxed beef and lower cash also were ignored today, as weights are lighter and slaughter was lighter with good beef movement for the week. Midday wholesale beef was lower with choice at 144.99 down 0.25 and select at 142.25 down 0.35. As mentioned yesterday, the recent strength in corn and lower trend of cattle prices cannot continue for too long. The weather premium is keeping corn firm for now, therefore cattle prices are beginning to follow. It appears the next test for cattle could be the recent highs between 85-86 for June and Aug.
 
 
Boxed Beef Cutout Values
Choice
Select
Loads
144.88
-0.36
142.31
-0.29
319
Choice/Select spread settled at +2.57
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
126,000
126,000
128,000
632,000
640,000
               
 
Feeder Cattle: 
 
Feeder cattle closed higher on the day following the outside markets as well as responding to the higher live cattle market. Technically, feeders are becoming oversold and this should begin to encourage buyers, however, futures look to follow live cattle’s choppy trade.
 
 
Lean Hogs: 
 
Direct hog markets were higher with the IA/So.MN direct market at $57.59 up 3.31; Western cornbelt $57.57 up 3.18; Eastern cornbelt $50.04 up .16; and the National average at $55.99 up 2.81 
 
Pork Carcass Cutout Values
 
 
Loads
59.30
+0.72
30
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
376,000
369,000
404,000
1.985
2.055
 
  • IA/MN weights 269.6 lbs. vs. 269.5 wk ago and 263.7 yr ago
  • Saturday estimated slaughter 25,000 head
  • Pork cutout: loins +3.11, hams +0.27
 
Lean hogs closed sharply higher on the day and on the week. Today’s strength was unexpected but followed the theme of generally commodity buying seen across the board. It was also aided by the sharply higher cash market and recent cutout strength. June futures are now priced just below 68.65, near the price they settled at on the day the swine flu story broke the market. June settled above that day’s price and Aug nearly filled that downside gap. Today’s trade fell in line with the choppy conditions. Speculators who were quick to sell on swine flu news and quick to pick a bottom have been controlling the market.  Hogs look to trade range bound finding resistance near the 20 and 40-day moving average next week.
 
 
 
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Regards,
EHedger LLC
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Chicago, IL 60604
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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.