EHedger Livestock Commentary 8/13/09

Published on: 17:52PM Aug 13, 2009
 
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Live Cattle
Feeder Cattle
Lean Hogs
LCQ9
84.175
-0.25
FCQ9
100.05
+0.20
LHQ9
48.80
+1.05
LCV9
88.20
-0.15
FCU9
99.90
-0.125
LHV9
45.40
+1.425
LCZ9
87.90
-0.15
FCV9
100.075
-0.10
LHZ9
45.05
+1.375
 
Index
100.71
+0.08
Index
51.00
-0.41
 
 
Live Cattle: 
 
  • NE trades $82 live
 
Live cattle closed lower on the day. It was another day without any strong direction as new information is light. Cash did trade in NE today at 82, which is $1 higher, but this did little for bullish efforts. Futures continue to carry a premium over the cash market and this will limit strong rallies for now. Technicals are downtrending, so rallies should find sellers. Resistance in October looks to be 89 and then 89.50. The fear for cattle futures continues to be the weak hog market. If we see another leg lower in lean hogs it looks like cattle can retest the bottom of the trading range towards $85 in Oct and Dec. Midday boxed beef was mixed with Choice at 140.75 down 0.44 and Select at 134.76 up 0.42. Continue to look for mixed choppy action in live cattle.
 
 
Boxed Beef Cutout Values
Choice
Select
Loads
141.13
-0.06
135.13
+0.79
405
Choice/Select spread settled at +6.01
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
127,000
123,000
129,000
503,000
513,000

 
Feeder Cattle: 
 
Feeders closed mixed on the day. Futures saw a very tight trading range with only 0.50 or less price movement in contracts. August closed higher as it was supported by the CME index. Bulls are trying to hold the $100 mark and were helped by a corn market that opened higher, but closed lower. Despite a weak market, the bulls have been doing a good job holding levels. Corn’s potential to move higher looks limited as corn yields were above estimates at 159.5 bu/ac and acreage was left unchanged on the latest USDA supply/demand report.  
 
Lean Hogs: 
 
Direct hog markets were higher with the IA/So.MN direct market at $45.45 up .03; Western cornbelt $45.75 up .14; Eastern cornbelt $45.00 up .20; and the National average at $45.47 up .03
 
Pork Carcass Cutout Values
 
 
Loads
52.31
-1.95
123.43
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
428,000
422,000
425,000
1.707
1.683
 
  • Pork cutout; loins -2.25, hams +1.64 (40.34)
  • IA/MN hog weights 267.8 lbs. vs. 266.8 wk ago and 257.4 yr ago
  • August expires tomorrow at noon
 
Lean hogs closed higher on the day. Longs finally got a bit of relief as futures avoided new contract lows and closed over $1 higher. The positive close can be attributed to steady to slightly higher cash market and the fact that futures have not really posted a bounce in nearly 3 weeks of selling. Tomorrow August expires at noon and October becomes the front month contract at a sizeable discount to the CME index. This will be supportive, but negative fundamentals still remain. The question now is: has the market absorbed all the bearish information yet? 
 
 
 
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EHedger LLC
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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.