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| Live Cattle | Feeder Cattle | Lean Hogs | ||||||
| LCZ8 | 94.275 | +0.425 | FCX8 | 100.65 | +0.15 | LHZ8 | 54.475 | +0.05 |
| LCG9 | 94.45 | -0.525 | FCF9 | 100.775 | +0.475 | LHG9 | 61.175 | -0.675 |
| LCJ9 | 95.55 | -0.405 | FCH9 | 101.175 | +0.675 | LHJ9 | 69.575 | -0.875 |
| | Index | 96.33 | +0.14 | Index | 57.74 | -0.41 | ||
Live Cattle:
Live cattle closed mixed with Dec holding a slight gain. Price action was mostly in response to professional traders taking profits after a 4-day rally, as well as concerns over stock market weakness. Cattle on feed anecdotal reports of strong marketing numbers; Oct placement numbers maybe be in the high 80%- low 90%. Total on feed numbers approximately 93%. Boxed beef posted solid gains for the third day in a row on active volume. Today’s slaughter was 122,000 head vs. 110,000 a week ago and 126,000 a year ago. Long-term demand for cattle should remain firm.
Looking Ahead: We remain friendly to the market as tight supplies are upon us, and fill in demand has a more pronounced effect. Overall trend should take cattle higher but we are reaching the upper end of the initial range and feel lighting up on existing long positions or playing for a small correction is warranted. We have seen a small correction today; look to buy Feb and April on additional weakness Thursday or Friday and continue to carry tight stop loss for protection. The Dow index continues to be an influencing factor, as was seen today.
| Boxed Beef Cutout Values | ||||
| Choice | Select | Loads | ||
| 147.64 | +2.93 | 140.32 | +2.47 | 466 |
| Choice/Select spread settled at 7.31 +$0.45 | ||||
| Slaughter | Wk Ago | Yr Ago | WTD | Yr Ago |
| 122,000 | 110,000 | 126,000 | 267,200 | 269,700 |
Feeder Cattle:
Feeder cattle settled slightly higher for the day. Feeders have continued to surpass all price expectations and traded to new 3-week highs. Even though today’s settlements were above the $100 resistance levels; this will likely be a price to watch this week. The smaller weekly show list and smaller weekly slaughter is showing the concern we had over tight cattle supplies. This week consider taking profits or taking a brief approach to short feeders at this level because of the sharp rally and overbought conditions.
Lean Hogs:
Direct hog markets were lower with the IA/So.MN direct market at $51.91 down $1.90, Western cornbelt $51.97 down $2.01, Eastern cornbelt $50.65 down $1.89 and the National average at $51.48 down $2.04. The pork carcass cutout was $0.81 lower to settle at $56.74 with 106.6 loads of dressed pork sold.
Pork cutout continues to move lower 56.74 dn .81; hams dn 1.07; loins dn 1.97
Weekly IA/MN hog weights up one pound from a week ago; 267.2
Saturday Slaughter expected to be light
Lean hogs closed mixed with pressure in the front months and with Feb. and April taking the brunt of the selling pressure. Renewed ideas that current production will continue to outpace demand (Export demand) has taken control and prolonged the markets ability to recover in the first quarter. Additionally, word from the country that most of next weeks procurement was scheduled and lighter Saturday slaughters because of poor packer profit margins backing up production into Jan.09 begin to circulate on the floor. Our sources have indicated nearby supplies will remain plentiful for the next 4-6 weeks. Cash is called weaker for this week. Traders are struggling to pick a bottom, which is why many have committed to the bear spread. We believe rallies should be sold basis Feb.
Looking Ahead. Cash news still looks negative; Dec Futures are now par to the index, which should lend support on further weakness. This still leaves the Feb. and Apr. contracts holding large premiums and no clear information on future export demand. One Key factor to watch for will be Sept Exports. This should give us a better view of demand without the Olympics, and the beginnings of tight credit. As we look ahead for next year we know production will be down, we also know exports should be lower. The million dollar question is centered on exports. We still like being bear spread long June short Feb and April.
| Pork Carcass Cutout Values | ||||
| | | Loads | ||
| 56.74 | -2.01 | 106.6 | ||
| Slaughter | Wk Ago | Yr Ago | WTD | Yr Ago |
| 435,000 | 435,000 | 426,000 | 859,000 | 845,000 |
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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.
