EHedger Livestock Commentary 8/31/09

Published on: 18:04PM Aug 31, 2009
 
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Live Cattle
Feeder Cattle
Lean Hogs
LCQ9
82.675
-1.975
FCU9
97.25
-0.90
LHV9
48.15
+0.075
LCV9
86.675
-0.025
FCV9
97.425
-0.625
LHZ9
46.225
-0.225
LCZ9
86.825
-0.275
FCX9
98.025
-0.525
LHG0
53.35
+0.575
 
Index
98.65
-0.80
Index
48.56
-0.24
 
 
Live Cattle: 
 
·        August expires today
 
Live cattle closed lower today. Futures sold off, but were able to work back towards opening prices. Generally all commodities markets were weaker, especially near the open as the Chinese markets sold off. August expired today, leaving October as the new front month. Last week saw October futures lower and cash prices higher, so the premium October and December were carrying have narrowed, yet a premium still exists. This will continue to limit strong rallies for now. Midday boxed beef was higher with Choice at 143.68 up .13 and Select at 136.02 up 0.14.   Packer margins are good and cash running a discount should lend some support to the feed yard manager as we begin Sept. Look for steady cash trade next week and a further shift in the basis off positive packer margins. 
 
 
 
Boxed Beef Cutout Values
Choice
Select
Loads
144.04
+0.49
136.01
+0.13
221
Choice/Select spread settled at +8.04
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
128,000
126,000
3,000
 
 

 
Feeder Cattle: 
 
Feeders closed lower on the day. As stated the feeder market has experience further selling when futures closed consecutively below $100 in October and November. It has been a combination of lower live cattle futures (cash has been higher), technical indicators, and ideas of feeder cattle numbers on grass. Pasture conditions throughout many key regions are positive. Yet, do not forget that cattle numbers overall remain near historic lows. Look for feeders to maintain its uptrend line as we are approaching the bottom end of its range. Next support strong for October will be 96-97. A close below 96 will be negative. Resistance this week will be today’s gap lower 97.75-97.95 and last week’s near 99.40. 
 
 
Lean Hogs: 
 
Direct hog markets were mixed with the IA/So.MN direct market at $47.70 up .73; Western cornbelt $47.62 up .45; Eastern cornbelt $44.08 down .07; and the National average at $46.82 up .77
 
Pork Carcass Cutout Values
 
 
Loads
57.82
-0.08
54
Slaughter
Wk Ago
Yr Ago
WTD
Yr Ago
430,000
421,000
2,000
 
 
 
  • Pork cutout; loins +0.72, hams –1.86 (60.79)
 
Lean hogs closed mixed today. Hogs were pressured early as outside markets such as crude oil and the financial markets were down sharply. Yet, futures managed to push higher midday and spreads were a main feature. Futures look to remain choppy this week and continue to consolidate. News was light with a supporting factor being the improved cutout, yet a negative factor is the cutout’s outlook after Labor Day. This week look to sell October near $50 and December near $49. 
 
Total pork production remain very large as weekly slaughter combined with weights running seasonally heavy has pushed total pork production to near record amount. We look for cutout prices to remain steady and parker margins to remain in the black. September weekly slaughter is expected to be 2.240; and will be key factor moving past Labor Day. Have we moved production forward due to favorable summer weather? Can the market move 450 million lbs of pork per week this fall? Can exports top 110,000 MT without China/Tiwain?
 
 
 
 
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Regards,
EHedger LLC
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Suite 1520A
Chicago, IL 60604
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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.