Pig crop neutral- New HIGHS June Hogs; New HIGHS Dec Cattle

Published on: 16:51PM Dec 27, 2010

 

CME Live Cattle

CME Feeder Cattle

CME Lean Hogs

Dec

104.90

+0.90

Jan

120.70

-0.75

Feb

78.85

+0.12

Feb

107.95

+0.37

Mch

123.67

0.00

Apr

82.75

-0.02

Apr

111.67

+0.27

Apr

124.22

-0.05

Jun

91.55

+0.35

 

Index

120.10

+0.62

Index

69.34

0.08

 


Live Cattle:

 

VERY STRONG Wkly comp exports 869 lds up 436 from ya and 172 lw

 

Dec pushes to new contract high close

 

wkly slaughter EST 548,000; 659 lw; 466 ly

 

*NO Deliveries; Partly through Dec 3, 2010

 

 

Midday beef Ch 160.59 (+1.67); Sel 152.99 (+0.35) 110 lds


Live Cattle: Cattle settle higher lend by Dec futures with expectations cash will trade higher this week. Out-front sales remain supportive; along with today's weekly comp export data posting a 9 week HIGH (10/23). Futures are holding an overbought position, though trade expectations are for next week and yr end fund support to hold current price levels. Following yesterday's active cash trade a 1-3.00 higher the basis has converged. Packer margins are believed to be at or near BE levels and will be a key point as the trade looks ahead to Jan and the "Goldman" roll.

Open interest Wed. - 418 contracts, @ 323642

 

Looking Ahead: New contract highs are the mantra for the moment; set backs are expected given the over-bought conditions the market is under. Packer margins are hovering either side of BE and this will need to be monitored along with southern plains weather. At this point we are 2/3's of the way through the "cattle" winter and the yard conditions are very good. The Dec-Feb sprd has moved some production against Jan, open weather and higher Feb prices will shift production, Exports and out-front sales seem to be filling against mid-Jan production needs. A retreat to the 18 day MA would be a good test, as well as correct current over bought conditions. Pre-roll will begin next week, the market is well positioned which may take some of the volatility out of the Feb/Apr sprd. look to buy breaks against the 18 day MA. monitor the 'open winter" if out-front sales stumble this maybe a problem given the premium Feb and April are holding.   


 

USDA Boxed Beef Cutout Values

Choice

Select

Loads

160.32

+1.40

153.21

+0.57

195

Choice/Select spread @ 7.11

Drop Cr**

12.50 (+0.03)

Slaughter

Last wk

Yr Ago

WTD

Yr Ago

128,000

127,000

122,000

0

0

                   

 

** Basis Steer and Heifers

* Prior days Information

 

FEEDER CATTLE:


Feeding Margins remain Negative

OK City closed

 

Direct trade remains firm, however most sale barns are closed this week, feeding margins have seen some improvement but remain; We look for further recovery over the coming weeks. 

 

* Prior days Information

 

 

USDA Pork Carcass Cutout Values

Load vol.

Cutout

77.06

-0.61

29.25

Slaughter

Wk Ago

Yr Ago

WTD

Yr ago

390,000

428,000

431,000

0

0

National Live Trade Wtd. Px

Net*

Vol.

National

68.63

+1.16

10090

IA/Minn

68.81

+0.78

4841

W. Cornbelt

68.64

+0.98

5539

E. Cornbelt

68.65

+1.50

4531

           

 

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

 

Lean Hogs


 

Thousand Head except pigs per litter

         

 

Dec 1 , 2010  actual %

2010 Actual USDA

2010 Average Trade Guess*

Actual minus Guess

2009 Actual, Revised

 

All Hogs and Pigs, December 1

99

                                64,325

                          64,498

(173)

             64,887

 

Kept for Breeding

99

                                    5,778

                             5,803

           (25)

               5,850

 

Kept for Market

99

                                58,547

                           58,683

 (136)

             59,037

 

Market Hogs under 50 lbs.

99

                                18,564

                          18,686

  (122)

18,705

 

50-119 pounds

98

                                16,519

                          16,681

  (162)

             16,782

 

120-179 pounds

99

                                12,208

                          12,188

              20

             12,299

 

180 pounds and over

100

                                11,256

                          11,263

              (7)

11,252

 

               


Wkly slaughter est 1848,000; 2344,000 lw;1606,000 ya

New Contract highs in JUNE, JLY, AUG


Lean Hogs- settled  mixed @ 1:00; USDA pig crop was a bit negative sending nearby futures lower prior to the 4:00 pm Globex close. The report was neutral with the exception of another record performance...in the pigs/litter @ 9.89 up 2%. Breeding herd seems to have found its grove with fairly stable numbers for the past 4 quarters. This may change in the months ahead as producers wrestle with high price feed. The futures market remain very sensitive to input cost, as seen in new contract highs in Jun, Jly, Aug. Today's report sets 2011 production at or near 2010 levels...no surprises, pigs/litter tune up the leveraging of the breeding herd. Futures should start to focus on demand and over best indicator will be cut out values.   

 

Looking Ahead: Today's report removes most production mystery, Congratulations to the US pork producer raising the bar again; pig/litter to new record. With record Nov meat production, very aggressive Dec slaughter and all indications are Dec meat production will be very large; product values will be the key factor to watch. ham prices are very attractive for exporters, bellies and lions look to be "high". the Feb/Apr roll over gets on its way next week, over all open interest is relatively low; leaving plenty of room for invest money to follow new contract highs. Fresh investment money flow is a huge wild card basis the April Contract. Now that we have our production numbers under control look to buy breaks against key MA numbers. (Feb 18 day @ 76.70; Apr 18 day @ 80.90)

 

2011 CME livestock markets will be a ride none of us want to miss... get ready and hold on.

 

 

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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