GENERAL COMMENTS:
Cash cattle maintained steady to higher cash prices that began to surface as the week progressed. This will give feedlots more confidence to hold for nothing less than steady prices this week. The packers may not cut back much further than they have and will need to maintain the current slaughter pace. Southern cattle traded at steady cash compared to the previous week with Northern cattle trading $2 higher. Boxed beef was mixed on Friday with choice up $0.22 and select down $0.94. Feeder cattle led the charge on Friday posting triple-digit gains with May through October contracts gaining over $2.00. The Commitment of Traders report showed fund traders adding 3,081 contracts to bring their live cattle net long futures positions to 40,113 contacts. There were 620 feeder cattle contracts added bringing the net long futures positions to 4,801.
It was a surprise hog futures were under significant pressure on Friday even though both cash and cutouts were higher. The packers needed to finish out purchases for the week stepping up and paying $1.67 higher with a weighted average of $90.38 according to the National Dairy Direct Afternoon Hog report. Cutouts gained $0.14 indicating continued supportive demand. However, trader psychology triggered the liquidation as some concern developed over the level of demand that will be seen due to the current higher prices. The packers will likely offer less cash today as they assess weekend demand. The Commitment of Traders report showed funds adding 3,994 long contacts bringing their net long positions to 92,002 futures contracts.
| BULL SIDE | BEAR SIDE | ||
| 1) | Steady to higher cash cattle last week will keep feedlots confident packers will pay at least steady money this week. | 1) | The differed live cattle and feeder cattle contracts still retain chart gaps below the market that may be filled at some point. |
| 2) | Live cattle closed the week at the highest level in a month. The packers may not cut the slaughter pace any further and may pay at least steady money to obtain the cattle they need. | 2) | Boxed beef continues to struggle with mixed prices on nearly a daily basis. Demand might have reached a plateau. |
| 3) | Higher cash hogs on Friday are not common but indicated packers needed more hogs to maintain slaughter. | 3) | The reduced export sales of pork may indicate that international demand is being affected by the higher pork prices. |
| 4) | Liquidation generally runs its course after three days with hog futures falling back to support and the range they traded in two weeks ago. | 4) | Hog futures fell back to the sideways trading range they had been in two weeks ago. Futures may trade in this range as traders assess upcoming summer demand. |
No comments:
Post a Comment