Cash Cattle Steady to Higher!
Today we have seen sales up to $136 per hundred weight. In the traditional live based Kansas through Texas, we see strong bids at $85. Last week traded $84 and $85. After the CME close we would look for feedlots to take that $85 with a few hitting $86 before the day ends. Overall, this is a good sign. It is interesting this happened even after the reminder of the bad economy. This market is acting like the worst of the economy is in. We do not have that confirmation in hand yet but it will likely be too late when we do. We are clearly bullish for 2009 contracts.
Cash Hogs Still Falling
The four-year average cash hog chart shows the low for cash hogs is now pushed more into the first week or so of January. On the long term situation we can note on next Tuesday USDA will release the quarterly Hogs and Pigs report. Our argument is supplies will drop sharply in 2009 by around 3% and overcome any net drop in exports. USDA feels pork production will fall only by 1% and that export tonnage will fall more than that amount. Next week's Hogs and Pigs report sets the stage for pork production from Dec. 1 2008 through Aug. 30, 2009...Rich Nelson
Rich Nelson is the Director of Research at Allendale, Inc. in McHenry, IL. Allendale is registered with the CFTC and NFA and is a member of the NIBA. www.allendale-inc.com
