HYPERLINK "http://www.allendale-inc.com/products/products.aspx" Allendale Livestock Wrap-Up for DATE \@ "M/d/yyyy" 5/27/2009
Hogs: The close was off a modest to moderate amount in a choppy trade highlighted by July posting a new contact low. June hogs have the opposite of June cattle’s problem: premium to cash. The main interior markets have again dropped the last two days and averaged roughly $54.50 in today’s early trade and leaves the June over $10.00 premium. So, to make money on $65.00 June hogs the cash will have to go well over it. Can it? I have a demand problem with it in here since a $10.00+ rise in the price of cash hogs needs a sharp rise in the price of the pork to support it. I cannot entirely blame “swine flu” on the demand problem but it has been a handy excuse for some of our trading partners to keep import bans in place. June hit my objective at $65.50 (and went lower of course) and currently is holding near that. However, my confidence is failing me until the pork market gets some legs under it. All meats are under the onus of high unemployment and continuing large losses in the job market.
Cattle: Moderate to modest losses here in a choppy trade. June cattle continues its “coiling” around the major moving averages ad nausea. Basically, we give it some benefit of the doubt since it remains at discount to the live market and that surprisingly (to me anyway) the packer’s kept the cash cattle prices about steady last week. The only fairly good spark of news for beef was last week’s beef export sales report but that hardly was cause for celebration. Wire report said that higher beef price today indicates the holiday weekend beef clearance was robust: doubtful, I give it average to just decent. And, the beef may have to be jacked up anyway just to cover the packer’s largesse in (seemingly) paying up for those cash cattle. Beef demand just not what is needed to turn the market around and after the Cattle on Feed report’s marketing number and combined with the beef Cold Storage report last week, it does not look to get much better for awhile. I look for the cash to drop to $80.00 but it may take to mid-June to do it.
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
