HYPERLINK "http://www.allendale-inc.com/products/products.aspx" Allendale Livestock Wrap-Up for DATE \@ "M/d/yyyy" 5/13/2009
Hogs: Modest to moderate losses in a consolidation-type trade. While some wire reports talk of near term highs being made, the jury is out on that yet. There is a thing of interest in the cash: I/M interior hogs rose to near $63.00 on April 23rd, fell on swine flu to near $50.00 on May 5th and as of yesterday was back over $63.00. It fell back today. Is this a coincidence? There may be some caution that the rapid recovery in the pork has met some resistance from retailers (case in point cash bellies today down $2 to $5?). Some later session support seemed to come from a report from Smithfield’s CEO that pork exports are 'improving' (Mexico relatively quickly with improvements to Japan, South Korea, and Russia), retail demand is 'rotating' back to pork, and Chinese demand is a 'wild card'. Should we take this with a grain of salt? He was speaking at an investor’s conference. BTW, Russia announced two more banned states for pork imports: Michigan and Washington. That joins Wisconsin from Tuesday. Expect June hogs to find it tough to get through $70.00.
Cattle: Lower close after a mostly lower day. The market was hit today largely due to the losses in the U.S. stock market and strength in the U.S. dollar. However, the reason for the stock market losses was a reminder, to me, of the how fragile beef demand may be. Retail sales were lower than expected and the consumer is still retrenching as the unemployment numbers expand. Additionally, under that scenario there seems to be 'ample' numbers of cattle available in this time frame and beyond for awhile. The biggest support for the June seemed to be its discount to last week's cash trade and the hope that this week's cash trade can hold steady, and perhaps technically, as the break enters into major moving averages (I use 45-50 day) support levels. Beef prices, midday, were modestly higher on moderate midday volume. Some wire reports a few bids in the live at $83.00. I still expect June and cash will get back to the $80.00 area or less eventually, though it may be a grindingly lower market.
John Kleist is an Ag Specialist 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
