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EHedger Livestock Commentary 6/18/09

Published on: 17:06PM Jun 18, 2009
 
(866) 433-4371         info@EHedger.com
 
 
Live Cattle
Feeder Cattle
Lean Hogs
LCQ9
81.70
+0.325
FCQ9
97.80
+0.475
LHN9
59.925
-0.025
LCV9
87.175
+0.225
FCU9
97.675
-0.025
LHQ9
59.15
-0.40
LCZ9
88.375
+0.275
FCV9
98.20
+0.075
LHV9
56.20
-0.825
 
Index
57.20
 
Index
96.26
 
 
 
Live Cattle: 
 
  • Cattle On Feed Report released this Friday
    • On feed June 1             96.7 (estimate)                        96-98.5
    • Placements in May            88.3 (estimate)                        82.9-97
    • Marketings in May             91 (estimate)                        90-92.4
 
Live cattle closed higher on the day. There wasn’t much to feature in today’s trade as futures closed midrange and worked directly up to the 20-day moving average near 81.75 (Aug). Bulls are arguing that tomorrow’s Cattle on Feed report is friendly and that packer margins are positive. Yet, midday wholesale beef prices were lower with choice at 139.90 down 0.53 and select at 133.30 down 0.65. Bears are looking at futures near the high end of the recent trading range and outlooks for beef to be sluggish against cheaper pork. There are no cash sales to report of today with bids remaining at 79 and asking prices at 83 to 84. Tomorrow looks to be uneventful with first resistance in August now near 82.15 and first support near 81.15 as traders wait for the report. Hedgers should look to sell any sharp rallies in Aug (83 and above).
 
Demand needs to lead the market higher, yet this will be difficult with other cheap proteins. It appears cattle are trying to form a bottom, yet more positive news needs to surface to confirm this. 
 
Boxed Beef Cutout Values
Choice
Select
Loads
139.93
-0.50
133.08
-0.87
339
Choice/Select spread settled at +6.85
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
127,000
124,000
128,000
516,000
504,000
               
 
Feeder Cattle: 
 
Feeder cattle closed mixed today on light volume yet again. Futures opened firmly on follow through buying, but quickly backed off. However, with higher live cattle and supportive outside markets futures remained firm. The break in corn and outlooks for the cattle on feed report may inspire new interest in feeder cattle, which has historically tight supplies. However, it is still early to excited with many problems that exist in the livestock industry. Ultimately feeders are looking towards the live cattle market for direction, so expect choppy action. Hedgers look to re-short August from 98-100. Buyers watch for breaks.
 
 
Lean Hogs: 
 
(Yesterday) Direct hog markets were higher with the IA/So.MN direct market at $57.27 up 50; Western cornbelt $57.29 up .39; Eastern cornbelt $53.34 up 1.57; and the National average at $56.09 up 1.03
 
Pork Carcass Cutout Values
 
 
Loads
55.58
+0.71
115.5
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
408,000
408,000
405,000
1.636
1.612
 
  • Pork cutout: loins +3.44, hams -.31
  • IA/MN hog weights 269 lbs vs. 269.3 lbs wk ago and 264.9 yr ago
  • Revised Wednesday slaughter 404,000 (8,000 few hogs)
 
Lean hogs closed lower on the day, yet better than expected given the sharp break in the value of the cutout yesterday. This is suggesting that speculators are willing to buy the oversold condition in hogs rather than to pressure them lower. July futures managed to trade above $60 for the majority of the day and any rallies in this month still should be sold. Cash markets will direct July’s price and it is still hard to call for sharply higher cash hogs until the cutout improves. June futures went off the board at 57.025. With today’s higher cutout in part to the recovery in loins tomorrow’s opening looks to be steady to slightly higher.
 
 
 
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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.