Hogs wait for Report

Published on: 15:38PM Sep 25, 2008

 

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Live Cattle

Feeder Cattle

Lean Hogs

LCV8

100.95

-1.225

FCU8

107.875

+0.175

LHV8

69.275

+0.325

LCZ8

102.625

-1.575

FCV8

106.85

-0.75

LHZ8

66.125

-0.10

LCG9

103.50

-0.825

FCX8

106.375

-1.075

LHG9

72.275

Unch

 

Index

107.63

-0.43

Index

70.81

+0.73

 

Live Cattle: 

  • KS reports 98-99.00 live; TX reports 99.00

  • NE reports 97 live; IA reports 95

 

Live cattle closed lower on the day on active volume. Liquidation from long positions from locals and speculators reacting to negative cash news had traders scrambling to sell early. News out of Nebraska claimed heavy weight cattle were for sale and needed to go. This news is what initially caused a sell off triggering stop orders on the way down. Cash did trade at 98.00-99.00 for live fed cattle. More cattle is expected to trade on account of the packers needs to complete next weeks orders. Midday boxed beef was lower with select at 159.08 down 0.53 and select at 151.69 down 0.27.  We would be a buyer of the Feb 09 cattle on further breaks.  Futures premium to cash has keep the rallies in check, yet the trade is anticipating cash to firm; the questions remains when....so trade the ranges for now.

 

Boxed Beef Cutout Values

Choice

Select

Loads

158.00

-1.61

150.67

-1.29

343

Choice/Select spread settled at 7.33 -$0.32

Slaughter

Wk Ago

Yr Ago

WTD

Yr Ago

127,000

126,000

123,000

508,000

506,000

 

Feeder Cattle: 

 

Feeder cattle closed lower on the day, except for September, which expired today at noon.  Today’s weakness followed the lead of live cattle.  November led the way down with triple digit losses, however, it did not give back all of yesterday’s gains.  This contract settled near down trendline projections, putting tomorrow’s direction mixed.  If trade occurs $100 or better live tomorrow, feeder cattle will get another strong rally.  Be mindful that there are concerns of financing cattle at these prices given the current financial market and tightening of credit.  Even if corn works higher, we believe the biggest impact on feeder prices will be live cattle.  Therefore, look towards live cattle cash trades and look to be buying breaks this week in feeders.

 

 

Lean Hogs: 

Terminal market hogs were steady with prices at $46.50-$49. Direct hog markets were higher with the IA/So.MN direct market at $71.50 up $.63, Western cornbelt $71.50 up $.51, Eastern cornbelt $67.90 up $.17 and the National average at $70.43 up  $.36. The pork carcass cutout was $.47 lower to settle at $74.75 with 96.3 loads of dressed pork sold.

 

·        Hogs and pigs report Friday, 2:00 CDT

All hogs                      102.1       100.5-103.7

Kept for breading        97.3      95.5-98.1

Marketing                 102.5      100.9-103.6 
 

Lean hogs closed mostly higher from better cash values and yesterday’s slight pork cutout price increase.  Today’s cutout was reported lower with loins and butt leading the way down.  Ribs pushed 1.87 higher.  Cash hogs for Friday are called mostly steady. Turmoil has flooded this market since the fund liquidation and now the fundamental trade is based around the hog and pig report. Many anticipate a bullish report and have committed to bull spreads such as buying October and selling December.  Demand remains strong but needs to be watch closely, the firming dollar will have an effect on pork exports. 

 

Looking Ahead: The weekly Ia/Minn. average weights were up 1.1 lbs wk ago @ 263, Dn 3.5 pounds from a year ago. This is in line with seasonal gains, look to see overall weights to tend higher back to yr ago levels.  We look for Sept Pig crop report to reflect strong production in the 4th quarter, Jan and Feb. Smaller Canadian imports and higher sow slaughter should reflect a 1-3% reduction for April forward.  We remain negative to the 4th quarter verse the first half of 09.  We are also looking to buy Oct vs. Dec hogs going into the report as firm packer interest should be supportive to the October futures going into expiration. 

  

 

Pork Carcass Cutout Values

 

 

Loads

74.75

-0.47

96.3

Slaughter

Wk Ago

Yr Ago

WTD

Yr Ago

435,000

436,000

418,000

1,734,000

1,675,000

 

 

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Regards,

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.