Wednesday's trade finished on a bullish note with December cattle posting a new seven-month high while cash bids inched higher, to $109. Later in the afternoon, AP reported that Japan and the U.S. were beginning negotiations on a new trade agreement -- news that may put a chill in traders' enthusiasm for both cattle and hogs. So far in 2018, Japan has taken one-third of U.S. beef exports and 17% of U.S. pork exports. Otherwise, traders will be watching to see if any cash trade develops Thursday, and it will be interesting to see if Wednesday's new high can survive until the end of the week.
Lean hog futures are holding steady in a narrow, sideways range, still near their highest prices in three months with USDA about to show another estimate of hog and pig inventories at 2 p.m. CDT. Early guesses are for a 3% increase in the September inventory of all hogs and pigs with a 2.5% increase in the June-to-August pig crop. With December hogs near their highest prices in three months, sellers seem likely to win the tug of war, but we also have to be impressed with how well carcass prices continue to work higher each week -- an impressive show of demand.
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December live cattle futures shook off Friday's bearish on-feed report and posted a new high Wednesday.
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Talk of new trade negotiations with Japan is apt to make traders nervous, knowing Japan is a big customer of U.S. beef and pork.
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Not much cash trade has developed yet this week, but bids were pushed up to $109 Wednesday.
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Select cuts of boxed beef continue to drift lower and are down nearly two dollars since Friday.
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Pork cutout values continue to firm through the month of September with carcass prices up over $2 since Friday.
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December hogs have rallied $14 from last month's lows, but it is fair to wonder if the rally is losing steam as supplies still seem ample.
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December lean hogs may have resistance at $58, but prices are holding firm so far.
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Thursday's Hogs and Pigs report from USDA is expected to show total inventory up a little more than 3% from a year ago, and it wouldn't take much of a deviation either way to hit prices fairly hard.
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| #completecalfcare |
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