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EHedger Livestock Commentary 7/30/09

Published on: 16:33PM Jul 30, 2009
 
(866) 433-4371         info@EHedger.com
 
 
Live Cattle
Feeder Cattle
Lean Hogs
LCQ9
84.575
+0.625
FCQ9
102.125
+0.10
LHQ9
54.625
-2.125
LCV9
89.85
+0.60
FCU9
102.275
+0.225
LHV9
52.60
-0.50
LCZ9
89.225
+0.375
FCV9
102.275
+0.05
LHZ9
52.975
+0.20
 
Index
101.61
+0.05
Index
59.83
-0.23
 
 
Live Cattle: 
 
Live cattle closed higher on the day. It was a very volatile trade in commodities as the grain markets and financial markets were sharply higher. In addition, crude oil nearly erased all of yesterday’s $4 losses. News on the cattle remains light, as there is still no cash trade to report. Bids are 81 with asking prices at 85. Midday boxed beef was mixed with Choice at 142.39 down .30 and Select at 137.02 up .02. The main bearish issue for cattle continues to demand concerns, although this doesn’t appear extremely bad. Beef prices are competing against cheap pork prices. The main bullish factor is the tight cattle supplies. These conflicting fundamentals will keep cattle in a mixed trading range.
 
 
Boxed Beef Cutout Values
Choice
Select
Loads
142.26
-0.43
136.82
-0.18
234
Choice/Select spread settled at +5.44
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
127,000
119,000
123,000
505,000
502,000

 
Feeder Cattle: 
 
Feeders closed slightly higher on the day. The higher live cattle and supportive financial markets kept futures higher on the day. However, the sharply higher corn did pressure feeders to nearly unchanged and right at our support levels. Futures continue to hold our support areas, but if second support cannot hold prices may have a sharp technical move lower. However, the cash index has narrowed significantly to the August contract. This will now be a supporting factor to the futures price level. October feeders should find support just above $102 and strong support near $101.50.
 
 
Lean Hogs: 
 
Direct hog markets were lower with the IA/So.MN direct market at $53.68 down .94; Western cornbelt $53.97 down .90; Eastern cornbelt $53.12 down .86; and the National average at $53.50 down 1.07
 
Pork Carcass Cutout Values
 
 
Loads
59.09
-0.45
104.3
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
415,000
420,000
420,000
1.665
1.66
 
  • Pork cutout; loins -3.37, hams +2.84
  • IA/MN hog weights 266.3 lbs. vs. 266.2 wk ago and 259.3 yr ago
 
Lean hogs closed widely mixed today. Bear spreads were a major feature as August sold off more than $2, while deferred contracts managed to close higher. Front month August has been pressured by the lower cash hogs and falling cutout price. The cutout is now at its lowest level since the beginning of July and has fallen 5.91 this week. There may be some relief to the falling cutout as a reduced slaughter due a one plant closing is expected tomorrow and Monday is expected to have six plants shutdown. This will account for just above 20% of pork production. Packers are trying to save positive margins, but the same bearish problem will persist. Slaughter reductions will back supplies up! The cooler weather and cheaper corn will not help the situation, as hog weights are heavy. Downward pressure still looks to be favored in hogs moving forward. Fundamentals will keep prices negative, but the oversold condition may bring in new buyers.
 
 
 
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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.