Allendale Livestock Wrap-Up for 8/1/2009
Hogs: Cash Markets were under pressure again today as expected with trade mostly a $1.00 lower. Liquidation of longs, weak cash and poor product demand is the resounding story for weaker futures. Is today the culmination of selling in the hog futures? That question has been asked many times. The market will tell us when we have bottomed. What signal should we be looking for? Usually when the last of the weak longs have liquidated or when the margin clerks have forced those traders out. The bottom will more than like be made before we get the fundamental news to support the rally because the cash buyers are waiting for the signal as well. Our suggestion for those wanting to pick bottoms is to look to the option market for strategies.
Cattle: Packers and feedlots are still at a standoff with bids at 82 and offer at 85 to 86. Futures retraced on worries about burdensome meat supplies and a possible peak in boxed beef prices. Funds were aggressive sellers today when the 20-day moving average was violated. The upcoming jobless statistics which will be released tomorrow are also a concern to cattle traders. Any further disruption in spendable income will reduce the propensity to purchase the primal beef cuts which could weigh on fed cattle prices. We are suggesting to trade cattle with in range. Buy at old support and sell at old resistance.
Paul Georgy is the President and CEO 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
