EHedger Livestock Commentary 6/22/09

Published on: 17:44PM Jun 22, 2009
 
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Live Cattle
Feeder Cattle
Lean Hogs
LCQ9
82.85
+0.725
FCQ9
98.925
+0.825
LHN9
60.45
-0.975
LCV9
88.525
+0.775
FCU9
98.875
+0.625
LHQ9
60.85
-0.95
LCZ9
88.525
+0.775
FCV9
99.05
+0.65
LHV9
56.875
-1.075
 
Index
95.89
-0.48
Index
58.03
+0.23
 
 
Live Cattle: 
 
  • Cold storage report released: Total beef about 3.5 million lbs higher than previous month (below yr ago levels)
 
Live cattle closed higher on the day. Follow through buying from last Friday’s cattle on feed report was a noted feature. This led to the highest gains in August and October cattle where numbers on feed and placements continue to be below year ago levels. However, the deferred contracts (2010) were lower today due to the continued break in corn values. Today’s trade continued to ignore bearish outside markets as grain, energy, and the financial markets were all sharply lower. Less supply is slowing starting to support the market. If demand increases (which can still be questioned) than cattle can easily work higher. Refer to the table below to see previous on feed numbers. Mixed outlooks for cash cattle this week will limit August rallies. 
 
Numbers below reflect the past On Feed for each monthly report – Today (6/1) 96
4/1/08
5/1/08
6/1/08
7/1
8/1
9/1
10/1
11/1
12/1
1/1/09
2/1
3/1
4/1
5/1
102
99
96
96
96
97
95
93
94
93
94
95
95
97
 
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 and the cattle on feed report should help establish this. Aggressive traders can slowly build long positions. 
 
Boxed Beef Cutout Values
Choice
Select
Loads
19.97
+0.38
132.06
-0.33
233
Choice/Select spread settled at +7.92
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
129,000
130,000
125,000
 
 
               
 
Feeder Cattle: 
 
Feeder cattle closed higher today. Light placements and sharply lower corn has inspired the feeder market to turn upbeat. We have now seen corn break well over 0.50 cents from its recent highs. Can we see an even bigger break? More will be known a week from today when the USDA releases an updated acreage and stocks report. Regardless of those numbers it appears that corn has seen its highs for the time being and will support feeder cattle outlooks. 
 
 
Lean Hogs: 
 
Direct hog markets were mixed with the IA/So.MN direct market at $57.10 up .87; Western cornbelt $57.41 up .78; Eastern cornbelt $54.27 up .26; and the National average at $56.09 up .23
 
Pork Carcass Cutout Values
 
 
Loads
56.03
-0.35
34.9
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
401,000
410,000
424,000
 
 
 
  • Pork cutout: loins -1.66, hams -.21
  • Cold storage report released: 584.14 million lbs vs. 612.29 month ago
 
Lean hogs closed lower on the day, giving back much of Friday’s strong finish. Some of the weakness can be directed at ideas of Friday being overbought. In addition, the futures premium remains a cause for concern as long as the cutout value is below the cash index. Today’s cold storage report can be viewed as slightly bearish as pork is storage was not reduced as much as previous year averages. However, we have known that pork movement has been slow and exports have been lower, so much of this data has already been worked into the market. This Friday the next hog and pig report will be released. 
 
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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.