EHedger Livestock Commentary 8/20/09

Published on: 17:32PM Aug 20, 2009
 
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Live Cattle
Feeder Cattle
Lean Hogs
LCQ9
84.80
-0.02
FCQ9
100.05
0.00
LHV9
46.92
+1.17
LCV9
88.82
+0.15
FCU9
101.10
-0.05
LHZ9
46.15
+1.52
LCZ9
88.60
+0.27
FCV9
101.20
0.00
LHG0
52.57
+1.22
 
Index
100.93
+0.07
Index
49.02
-0.23
 
 
Live Cattle: 
 
  • Export Sales- solid weekly sales with good shipments
  • Hides and Skin Sales remain on fire(Drop Credit is up 50% since Jan 2009)
  • Cattle on Feed Report released Friday
          • Estimates            Range
    • On feed Aug 1                   96.6                        95-97.9
    • Placement’s in July       107.3                    104-113.1
    • Marketing’s in July            95.1                        94-98.2
 
Live cattle closed mixed in quiet trade ahead of Friday’s COF. As expected the on feed and marketing numbers are once again under 100% highlighting the tight supply issue. At first glance placements might appear to be a high figure, but keep in mind that many placements were taking place against the 1.00 break in corn. Midday boxed beef was firm with Choice at 141.91 up 0.23 and Select 134.92 up 0.23. Early week cash indications are positive with boxed beef and smaller showlists. No sales have been report to this week; bids on the week are 80-81 with asking prices at 84 giving a steady outlook.
 
Cattle will continue to be influenced by the financial direction. Tight supplies are bullish, while hogs and boxed beef perception remain bearish. This weeks Comprehensive Box Beef “forward/22 days and up” sales were OUTSTANDING; 2615 loads largest since 2003 and approx 1000 loads above YA.  Trimming are reported to be driving most of the volume; seasonally the combine forward sales improves as “Back to school” needs are met. Resistance in October looks to be 89 and then 89.50. The fear for cattle futures continues to be the weak hog market. 
 
 
Boxed Beef Cutout Values
Choice
Select
Loads
141.87
+0.22
134.81
+0.12
301
Choice/Select spread settled at +7.06
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
128,000
127,000
129,000
506,000
503,000

 
Feeder Cattle: 
 
Feeders closed mixed as the action suggests the feeder market to remain in choppy two-sided action. The feeder market will remain a follower to live cattle. If the October live cattle can work higher, expect feeders to move in conjunction. However, be mindful of the premium October live cattle carries as August expires this month. Futures have been able to maintain closes above $100 and this should continue to act as support.  
Lean Hogs: 
 
Direct hog markets were mixed with the IA/So.MN direct market at $47.14 up .27; Western cornbelt $47.28 up .23; Eastern cornbelt $44.34 down .55; and the National average at $46.38 down .12
 
Pork Carcass Cutout Values
 
 
Loads
51.34
-0.35
84.0
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
430,000
428,000
434,000
1.718
1.714
 
  • Pork cutout- 0.35(51.34) ; loins -1.07, hams -0.73 (40.42)
  • Actual Sow Slaughter 61,875 (wk of 8/8/09); 61,248 wk ago; 68,413 YA
  • Canadian hog inv. – 6.7%; Breeding – 4.6%; Apr-Jun pig Crop – 6.4%
 
Lean hogs closed higher on the day. Bull spreads remain the key feature today as hog spreads have been trading very wide ranges the past several sessions. Oct and Decd continue to find support due to their discounts to the CME index. Weights are still running seasonally heavy due to near perfect growing conditions. Packer margins remain good driving seasonally strong slaughter rates; week to date slaughter is up 4000, with a strong Sat. slaughter predicted. Packer margins are key and need to remain in the black, weights will continue to run above year ago heading into late fall, 2.2 million weekly slaughter will likely continue; will the product market be able to clear this production at the current cut out. In the meantime, the hog markets looks to find buyers on major breaks in Oct and Dec, as a bottom maybe forming. It appears that October and December futures are consolidating at these levels (Dec 43.50-45.50) waiting for the cash index to eliminate its premium. 
 
 

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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.