GENERAL COMMENTS:
September was the start of the new initiative to import foreign ground beef at discounted rates for the American consumer. The impact of up to 300,000 metric tons hitting our market is still yet to be seen, but the initial shock and selloff seem to have worn off now that September is here. Mexican cattle are now slowly crossing the border, which has also weighed on the market, as we've seen with the weakness in the cash trade. The biggest concern in the market Wednesday is the sharp spike in the cost of feed. Soybean meal and corn have taken off like a rocket, giving way for concern over ration mixes and costs.
Hog futures were mixed Tuesday with deferred months higher than the nearby. The short rally we saw to end August is hitting some headwinds as we kick off September. Slaughter numbers are steady and cash values are higher, but futures need a little boost to continue any upward momentum.
| BULL SIDE | BEAR SIDE | ||
| 1) | Feed costs will limit finish weights, lowering the overall pounds of product on the market with already tiny herd sizes. |
1) | Government programs are being announced with little to no details, such as the heifer retention program U.S. Agriculture Secretary Rollins alluded to Monday. They serve to grow the cattle herd or at least suppress prices with short-term fear. |
| 2) | Cattle futures appear like they have found support regardless of the endless amount of bearish news hitting headlines. |
2) | The Mexican border has been open since late August, with more ports expected to open soon, allowing more cattle into the country. |
| 3) | Pork cutout values are bringing strength to futures. |
3) | Futures excitement in hogs seem to be short lived despite supportive pork cutout values. Futures still want the market to prove a need for a rally. |
| 4) | Cash values for hogs continue to firm. |
4) | The Lean Hog Index was lower at the end of last week. |
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