Allendale Livestock Wrap-Up for 8/26/2009
Cattle: It is in your interest to see the new Time magazine article called “Getting Real about the High Price of Cheap Food”. It takes an ominous tone to commodity beef and pork production and compares it negatively health wise to natural and organic meat. In other words, it puts fear into the average reader. That may be the biggest reason for today’s futures price decline when everything else in the short term is supportive. In the short term, we are getting clear signs the summer low in cash cattle was posted three weeks ago and we are now seeing the normal price rally into fall/winter. Wholesale beef prices have been running for five days now. Gains in choice total $2.84 and select is up $2.57 in those five days if you include today’s midday beef report. Weekly showlist counts are showing good declines in available cattle. Cash cattle bottomed three weeks ago at $81 and traded last week at $83. This week the trade is expecting $1 to $2 higher which puts you at $84 to $85. Pretty much all economic reports show moderate improvement. In other words, short term fundamentals are clearly supportive.
Hogs: You could argue some of the selling today was based on the Time magazine article. As noted in the cattle comments, it raises fears in the consumer’s eyes about commodity pork and beef production. We can also point to some concern about this pork cutout (wholesale pork) as well. A $15.75 jump in ham prices in three days may be hard to sustain. We see the cutout dropped 32¢ this afternoon and would not be surprised to see it fall a little more in the coming days.
Rich Nelson is 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
