GENERAL COMMENTS:
Both live cattle futures as well as feeder cattle futures were higher Tuesday as traders position themselves ahead of Friday's Cattle on Feed report. Cash trade has been quiet this week as expected since packers bought a large quantity last week. Average carcass weights were 897 pounds this week, up 9 pounds from last week and 13 pounds from last year. Corn prices falling will be supportive for feeder cattle; however, if they continue to fall post-harvest, it could lead toward higher slaughter weights again. Beef cutouts were higher on Tuesday.
Lean hog futures were mixed Tuesday with the nearby markets higher and the deferred contracts for spring and summer lower. Pork cutouts were lower again Tuesday, with a bright spot under the pork belly category, which was up $2.74/cwt on Tuesday. For market news to change the current outlook of the lean hog contracts or pork prices, we have some reports set to be released this week. Thursday will be the release by NASS of Commercial Slaughter data and Friday will be the Cold Storage report. A change in inventory of pork could give the market some new direction.
| BULL SIDE | BEAR SIDE | ||
| 1) | Cash trade has been strong despite the number of cattle currently available in the north. | 1) | Cattle on Feed expectations are bullish, and the market has traded higher ahead of Friday. Should the report be unchanged or placements higher than expected, market could react sharply. |
| 2) | Technicals are supportive for cattle markets as October and December traded and closed above the 200-day moving average. | 2) | As beef prices climb, consumers may be looking for other protein alternatives at a more competitive price. |
| 3) | Pork belly prices are still strong despite other cutout prices drifting lower. | 3) | The long-term lean pork chart from a technical perspective is still trending lower. |
| 4) | Managed money is short a near record number of lean hog contracts, and any market news could quickly cause them to lift positions, giving a boost to futures. | 4) | A large managed money position is difficult to overcome as they short the hog market. |
No comments:
Post a Comment