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Beef / Pork lower sending Cattle and Hogs lower

Published on: 17:46PM Dec 15, 2010

 

CME Live Cattle

 

CME Feeder Cattle

CME Lean Hogs

Dec

101.60

-0.22

Jan

117.65

-0.30

Feb

75.20

-0.92

Feb

103.90

-0.62

Mch

118.40

-0.40

Apr

79.22

-0.82

Apr

107.30

-0.45

Apr

118.92

-0.42

Jun

88.72

-0.87

 

Index

118.74

-0.14

Index

69.14

+0.09

 

 

 

Cattle On Feed

USDA Actual

Aver Guess

Est Range

Dec . 2010 Est. based on aver Guess

12/1/2009

On Feed

-

102.5%

102.0-103.1

11,130

10,859

Placed

-

105.1%

101.1-110.4

1,569

1,493

Marketed

-

110.0%

108.5-111.6

1,849

1,681

 


Live Cattle:

NE Trades 159.00-160.00, 99.00 est. vol 6000 hd

Long term Interest rates push  to six month HIGHS off  Tues. FOMC minutes released today. (It may be time to shore up your lending needs)

Midday beef Ch 162.37 (-2.17); Sel 152.72 (-0.33) 203 lds


Live Cattle: Cattle settle lower off lower midday cash trade and weak outside markets. Beef prices worked lower today and are expects to remain soft for the next week. Board feeding margins continue to struggle. We believe the market will begin to correct and adjust margins to reflect better producer margins. Packer inventories are tight, today's slaughter represents 2 days of lower day or day is some time. Is it a sign of slower chain speeds? Is it too little too late?   

Open interest thurs - 2733 contracts, @ 334545

 

Looking Ahead: we continue to look for a bit more correction, to 103.50 Feb and 106.50 area Apr.  Packer inventories are tightening and with the holidays falling on Sat, lighter slaughter is expected, for the remainder of this week and early next. Packer margins are tight which could hamper cash trade this week. Without slower chain speed this will leave inventories very tight heading into the last half of the month. This Friday COF report has Aver guesses on feed @ 102.5; placements up 105.1% and mkt up 10%. We believe the placement number has room for error given the market disruption Eastern Livestock presented. Board feeding margins have been rocked this month, and should be in position to correct, this would lend support to the April fats on back. The next few weeks seasonal trends in exports, forward sales, and domestic needs all take a softer step and will hopefully give us a chance to buy the break.


 

USDA Boxed Beef Cutout Values

Choice

Select

Loads

161.97

-2.57

152.65

-0.40

344

Choice/Select spread @ 9.33

Drop Cr**

12.09 (-0.15)

Slaughter

Last wk

Yr Ago

WTD

Yr Ago

124,000

131,000

119,000

380,000

367,000

                   

 

** Basis Steer and Heifers

* Prior days Information

 

FEEDER CATTLE:


Feeding Margins remain Negative


Feeders settled lower and below short term support with dry conditions in the southern plains, sale barn activity for all piratical purposes closed for the season and negative feeding margins a test to the 40 MA is certainly possible; which pencils in around 116.00 basis March.  Friday's COF report should show aggressive marketings; placements will be the wild card due to placement disruptions in Nov. off Eastern Livestock closing.  Funds are holding a small long position which may be a factor as yr end approaches.   We continue to believe board feeling margins will flip leaving retain ownership the  growers best value with overall feed numbers in tight supply.  

 

* Prior days Information

 

 

 

USDA Pork Carcass Cutout Values

Load vol.

Cutout

78.33

-1.16

59.75

Slaughter

Wk Ago

Yr Ago

WTD

Yr ago

427,000

426,000

435,000

1271,000

1287,000

National Live Trade Wtd. Px

Net*

Vol.

National

65.83

+0.43

10892

IA/Minn

66.58

+1.38

4733

W. Cornbelt

66.28

+1.10

5379

E. Cornbelt

65.40

+0.23

5513

           

 

* net is based upon HG 200 report "National Direct Prior Day"

 

Lean Hogs


Long term Interest rates push  to six month HIGHS off  Tues. FOMC minutes released today. (It may be time to shore up your lending needs)


IA/MN weekly weights 275.6 vs. 275.6 lw, 268.5 ly


Cut out dn 1.16 @ 78.33- Hams dn 3.98 @ 66.35 Loins up 0.11 @90.93


Lean Hogs- settled lower in moderate to active trade of production concerns circulate ignoring positive midday product news and better trade on the HG 201 report. Professional trade remains bearish off perceive weak Dec expiration and production concerns heading into Jan. Dec. hogs final settlement will be release Thursday. Packer needs look to be covered for next week.

 

Looking Ahead: Product Values pushed higher again, however concerns over Jan pork production are weighting on the market. 4th quarter pig crop will be will be released Monday Dec  27th at 2:00 pm CST. Leading into the report we should seen "position evening" type trade combined with a light holiday trade my add additional volatility with current bearish tone seen the last few days. Slaughter needs look to be covered for the week, based upon hg 201 report. Weekly pork production has been very strong and we continue to look for product values loosen up. Cattle vs. Hogs closed just below the 40 day MA support which holds an interesting look at the long term trends. We look for cattle to gain on hogs and retest the 40 MA at least one more time. Pork production vs. product vales will be the best indicator for the next move. Several dynamics are in play, negative cattle feeding margins, tight cattle/hog spread, and expected Jan production In our opinion, it will be tough without an improvement in exports. 

 

 

Please give us a call, or click Paul Nelson to become  part of an elite ag risk management team.

 

Best regards,

Paul Nelson

 

866-433-4371 Toll Free

EHedger

141 West Jackson Blvd.
Suite 1520A
Chicago, IL 60604

 

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