COF and Cold Storage reports FRI. Look for Furures to consolidate

Published on: 19:31PM Jan 20, 2011

 

CME Feeder Cattle
CME Lean Hogs
Feb
108.65
-0.15
Jan
126.30
-0.70
Feb
80.27
+0.27
Apr
113.45
+0.25
Mch
126.30
-1.20
Apr
86.75
+0.35
Jun
112.67
+0.22
Apr
126.72
-1.27
Jun
96.97
+0.22
 
Index
127.35
+0.40
Index
75.45
+0.70
 
 
 
 
 
 
 

 

 
 
Live Cattle:
 
Cash Trades KS 106;CO 104-106.00, 170.00; NE 170-172.00
Wkly vol. Est. 60,000
 
NEW RECORD HIGH FOR DROP 13.02 up 0.22
 
Midday beef Ch 172.86 (+0.95); Sel 170.3 (+0.76) 116 lds
 
COF Guess
ON Feed        104              103-105
Placed           113.5           103-120.5
marketed      105              103-107
 
 
Live Cattle:Cattle settle mixed as cutout values pushed higher and drop credit reaches new all time high. Weekly Box beef volume has been moderate to good with slaughter running near last week's level. Lower cash trade today in KS carried the largest impact pressuring Feb following mid-day beef quotes. COF will be released Friday @ 2:00 CST; once again Placements will be the wild card. US beef and pork remain very competitive in the world market both on price and availability. It is still very early in the marketing yr, however domestic sales are dn 1525 lds from YA which is fueling concerns over domestic demand.    
 
Looking Ahead:This week's spike higher to new contract highs suggests the trend is still higher. However with better packer inventory and favorable growing weather in the southern plains and slowing retail demand, we would expect futures to begin to consolidate into First notice day.  New fund money flow should slow as well, taking some of the push out of the market for the next few days. We believe we are seeing a category shift form retail to HRI as the economy improves which often distorts marketing channels before the packers can shift their focus. This was a concern in late 2008 as consumers shifted to retail from HRI. Look for a test to mid level support; 111.50-112.00(J).   
 

 

USDA Boxed Beef Cutout Values
Choice
Select
Loads
171.81
+0.90
170.86
+0.69
225
Choice/Select spread @ 1.95
Drop Cr**
13.02 +0.22
Slaughter
Last wk
Yr Ago
WTD
Yr Ago
126,000
128,000
129,000
501,000
513,000

 

 
** Basis Steer and Heifers
* Prior days Information
 
FEEDER CATTLE:
 
Feeding Margins  remain very poor
 
OK City rocketed higher, running 5-10.00 higher than the previous week. Actual receipts 10,505 vs. 13,127 ya and 8552 lw.  Commodity funds continue to add to their long positions; CFTC commitment of traders indicated managed money bought approx 1000 contracts, since the first of the yr up 5000 or approx 10%. New contract highs continue to drive this market, while nearby feeding margins remain under pressure, fall margins have improved with new crop corn "only" 5.78 and a new contract high as well.
 
* Prior days Information
 

 

USDA Pork Carcass Cutout Values
Load vol.
Cutout
85.95
-0.06
91.88
Slaughter
Wk Ago
Yr Ago
WTD
Yr ago
419,000
424,000
405,000
1621000
1626,000
National Live Trade Wtd. Px
Net*
Vol.
National
74.45
+1.43
19756
IA/Minn
75.02
+1.04
10554
W. Cornbelt
74.98
+1.10
11058
E. Cornbelt
73.84
+1.83
8118

 

 
* net is based upon HG 200 report "National Direct Prior Day"
 
Lean Hogs
 
 
USDA Monthly cold Storage report Friday 2:00 CST
 
Pork Product- Loins -2.16 @ 99.04; Ribs and Hams higher
Wkly IA/MN weights 274.8; 275.8 lw; 270.7 ya
 
Lean Hogs- Hogs settled higher in the near-bys as product values hold and parker margins remain strong. Quoted product volume has been good over the last few weeks on firmer money; Today's dip in loin prices maybe an indication that further gains in cutout will have to come from hams, ribs and butts. This Saturday's slaughter is estimated @ 125000 which will keep growers current as overall weights remain above yr ago levels. Friday's cold storage report is expect to show moderate increases, since Dec. ham prices have been on the defensive compared to loins which may be our best indication for increases. The market will also have a keen eye for early Dec export expectations. Futures spiked higher to new contract highs this week making it the 5th week in a row  for new contract highs.  
Looking Ahead:  Next week's Slaughter will remain a key point to watch with strong packer margins we would expect to see active chain speed; at this point the Next Sat (1/27) slaughter looks light. If this is the case, WHY? Has domestic demand hit resistance? Are hogs numbers getting tight? Look for Feb and Apr. basis to adjust over the next few days as Jan. moves into its last week. Friday's cold storage should show favorable draw down numbers as a result of good Dec. exports. Weights remain high, actual slaughter weights for the week of 1/8 clocked in @ a whopping 210# for hogs and 207# for B&G. Dec pork production data should be very strong. Until futures begin to react poorly to good news look for short and mid-term support to hold. Technically, we still want to see a retesting the 9 day MA (HEJ 85.00). Building OI and new contract highs tend to be powerful indicators of the long term trend. Fresh investment money flow can be an impact against April and June contracts. 
 
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