Lean Hogs lower/ Pork Porduct tumbles/ Feeders rally off 12 lower corn mrkt

Published on: 17:58PM Sep 28, 2010

 

CME Live Cattle
CME Feeder Cattle
CME Lean Hogs
Oct
97.15
-0.10
Sept
110.00
+0.12
Oct
78.57
-0.57
Dec
99.30
-
Oct
110.40
+1.00
Dec
75.90
-0.87
Feb
101.17
+0.07
Nov
110.60
+0.82
Feb
79.27
-0.70
 
Index
109.92
+0.07
Index
83.67
+0.00
 
 
Live Cattle:
 
Midday box beef 157.81 (+0.22) 149.23 (+0.30) 115 lds
PACKER Margins are the tightest seen in 60 days
 
 
Dollar index makes new lows
Euro back to April high; Ausie $ new contract high
Live Cattle: futures settled mixed as midday beef posted modest gains, however box volume was light and final volume for today remained light @ 179 reported loads. Corn futures ended the day dn over 12 cents lower taking some of the strength from the differed fed cattle. Packer Margins have drifted to near breakeven; this will limit their ability to push bids; we expect cash to trade 96-98.00 range this week. Month end retail interest and money flow was primary to today's better prices.  US beef is now the lowest cost and highest quality product to the world export market. time will tell if Packers can get in front of their beef sales demands. In our est. packers are still holding little forward inventory, next week they will be able to pull from contract cattle but will this be enough to offset recent forward sales?
Looking Ahead:  For the past 60 days slaughter has been outstanding, along with packer margins, the drop pushed to new highs lending support to margins while Box beef set back 8-12.00.  Now packer margins are @ near BE; drop still @ record (11.14); We believe Packers will defend their margins, box beef will need to push higher, either as a result of slower chain speed, and /or better demand.. With retailers poised to push price hikes ahead; one would think  retail demand may soften. Current chain speed leads us to believe packers are short bought but they will have contacts to draw from next week; in addition first of the month paycheck volume will have pasted putting fresh export business as the best beat for better demand. Supply side should be enjoying better production weights, on steady numbers.... Northern plains markets is a key area to watch for producers willingness to sell. Packer interest should pick up again mid week. Money flow will ultimately drive this wks trade into Tuesday, next. Look to sell Dec early next week for a moderate correction lower.
 Hedge Recs: Look to cover Oct hedges 95.00 area.
 

 

USDA Boxed Beef Cutout Values
Choice
Select
Loads
157.62
+0.03
149.18
-0.35
179
Choice/Select spread @ 8.44
Drop Cr.
11.13 (-0.01)
Slaughter
Last wk
Yr Ago
WTD
Yr Ago
129,000
130,000
126,000
257,000
248,000
 
 
 
 
 

 

 
 
 
 
 
 
 
 
 
 
FEEDER CATTLE:
Pushed higher as corn tumbled 12 cents lower off month end profit taking. Sept Feeders expire Thursday @ noon. Today's index @ 109.90 is at par and expected to go off quietly. Commercial interest, lower corn remain the supportive factors for Oct and Nov. Technically a bounce back to 112.40 can be expected baring differed cattle hold current prices. Continue to monitor feed needs; CBT corn has technical support near 4.84 basis Dec.
* Prior days quote

 

USDA Pork Carcass Cutout Values
Load vol.
Cutout
87.90
-2.78
118.63
Slaughter
Wk Ago
Yr Ago
WTD
Yr ago
417,000
417,000
439,000
833,000
876,000
National Live Trade Wtd. Px
Net
Vol.
National
79.91
+1.24
12025
IA/Minn
81.25
+3.14
5912
W. Cornbelt
80.97
+2.78
6834
E. Cornbelt
78.51
-0.87
5191

 

 
 
 
 
 
 
 
 
 
  
 
Lean Hogs: 
 
 
Euro back to April Highs
 
Open Interest  New Record high 243,364 up 1518
 
Dollar index makes new lows
Bellies tumble lower dn [email protected] (more is expected)

 

 

 
Lean Hogs- settle lower off month end profit taking and technical selling. Open Interest pushed to new record high on Monday, 244294 up 930 contracts. Futures are trying to balance money flow, mouth end buying which is expected to surface Wed into next week; against improving hog weights, and concern over retail price hikes and softer domestic demand.  Packer purchases seem to covered through most of this wk into Sat. Margins remain strong but the packers wiliness to push cash above 81.00 (lean) has been limited. Retail price hikes are expect for the 4th quarter.
 
Looking Ahead: As the dollar tumbles lower; the Euro and Ausie Dollar have recovered sending US beef and pork to be the cheapest in the world. These are long term factors to keep in mind as the market looks toward Feb, April, and June.  For most of the summer FSU has been an aggressive buyer of EU pork because it was the cheapest source due to Euro currency crashing as a result of Greek debt. Yesterday we discussed our concerns for first half of 2011 production to remain flat to 2010 numbers. There will be rationing and producers have responded by adding weight when possible, nothing stays constant, however as we look to fall production improving. Packers appear to have most of this week covered and off to a great start for next week, which is putting a negative tilt to near-by prices. Add in money flow, cheap dollar/ exports, high corn prices makes 2011 prices look cheap.  Antidotal reports continue to show strong weight gains.  Producer supplies are improving and performance has returned.  We remain concerned over wholesale prices softening demand for the 4th quarter. Tight inventories, packer profitability, and aggressive fund buying should be supportive for the balance of this week into Tuesday next. Technically Friday close below 75.95 (Dec) will indicate a test of the 40 day MA 74.47.
Exited Oct/Dec this AM @ 245.
 
  
 
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