HOGS-CATTLE-CORN lower as funds take a rest- By Paul Nelson

Published on: 16:55PM Jul 26, 2010

 

07-26-10 

Live Cattle

Feeder Cattle

Lean Hogs

LCQ0

92.65

-0.77

FCQ0

114.95

-0.22

LHQ0

82.00

-1.22

LCV0

93.77

-0.95

FCU0

115.17

0.00

LHV0

75.47

-1.55

LCZ0

95.82

-0.65

FCV0

115.40

+0.15

LHZ0

73.02

-1.32

 

Index

112.60

+0.67

Index

79.03

+0.97

                   

 

 

Live Cattle:

 

Cattle on Feed

USDA Actual

Estimate

Act vs.Est.

Actual July 2010

July 1st 2010 Est

June 2009 Act.

On Feed

103%

103.3

-0.3%

10.070

10.044

9.752

Placed

117%

120.3

-3.3%

1.997

1.673

1.391

Marketed

100%

101.7

-1.75%

1.628

2.022

1.989

 

 

 

Midday box beef  154.60 (-0.06) 146.55 (+0.10) 167 lds

Wkly Comprehensive Box Beef Movement- Good Forward sales; exports strong

 

Live cattle- Settled lower off lower expected June marketing numbers and general" lack of fund participation". Let's keep things in perspective, since the last COF report Oct LC futures have rallied almost 6.00 cwt; Dec just over 5.00; FCQ is up almost 5.00; reflecting better summer export markets and improved forward sales. Fall marketing's should remain strong as the market works through the  With a "improving" economy and far better exports this yr. profitability has improved in the cattle industry. Friday's reports continue to emphasize the extremely tight the US feeding  industry. Key factors to watch: Packer Margins-without positive packer margins slaughter rates will be reduced heading into larger supplies (April- June placements + 14% from YA and down 2.8 % from the 5 yr avr.). Feed yard profitability- for the past 60 days negative board margins coving a good portion of the feeding industry.  Commodity Funds- holding large long position with month end this Friday...will they be here to support their position?

Outside Markets- stock market and dollar. Futures market would welcome some opportunity to pull fall marketing's ahead but will we be able to keep packer margin in the black to improve slaughter over the next 60 days?

Looking Ahead : Next week remain cautious, as exports and month end retail beef and "long" fund positions support will be the dominate factor if higher futures  are in the cards for next week. With the economy still sputtering and back-to-school expenditures ahead; we look for  Aug to trade steady weak and Oct to consolidate for a few weeks.     

New Trade Rec. Sold LCV against 94.20; stop 95.10 stp close only; Exit position 92.60

 

Boxed Beef Cutout Values

Choice

Select

Loads

154.90

+0.24

145.78

-0.67

240

Choice/Select spread settled at 8.20

Slaughter

Wk Ago

Yr Ago

WTD

Yr Ago

129,000

126,000

124,000

0

0

                 

 

 Feeder Cattle: 

Inventory report confirms tight supplies going forward

Feeder Cattle settle with a mixed tone; Can CME futures make new contract highs in light of Friday's tight inventory report? Funds currently hold the largest portion of the long side of the market. In the short run, with month end this Friday there is a good chance we could see a push higher. To sustain prices the market will need to see fed cattle prices move higher and feeding margins improve greatly. Interest at the sale barns remain aggressive as bidder's try to stay ahead of the tight supplies. Particularly at the expense of future close out margins.

 

 

Lean Hogs: 

Direct Live Trade  Wtd Avg

 

Pork Carcass Cutout Values

National

79.32

+0.85

11412

 

Cutout Value

 

Loads

IA/MINN

79.48

+2.11

4646

 

86.74

+1.48

36.00

W. Cornbelt

79.18

+1.55

5774

 

Slaughter

Wk ago

Yr Ago

WTD

Yr Ago

E. Cornbelt

79.54

+0.07

5462

 

386,000

379,000

419,000

   

 

Hams, Bellies back near April spring highs

Funds purchase approx.  6200 contracts; increased long position by 5200

 

Lean Hogs- closed lower as expectation for steady to weak cash trade this week as forecasters call for more moderate temperatures. Hog weights outside of the Midwest are responding very well, and may have posted there seasonal low. Product demand...Partially bellies is very good, which should be supportive to carcass cutout prices. We believe cutout will hold a steady to firm tone in the coming weeks.

 

 

Best regards,

Paul Nelson

 

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