Allendale Livestock Wrap-Up for 9/9/2009
Hogs: Big gains were made in the summer 2010 contracts today. June was up a full $2 on the day’s close. The hope is that we are doing big sow slaughter right now which is supportive for the mid 2010 supply picture. We do like the idea itself and also the idea of being bullish most 2010 contracts. We will have lower supplies and will likely have fixed some of the export problems by then. We remain bullish 2010 contracts and will not apply hedges on that timeframe in the foreseeable future. Nearby’s were dragged up on that news and also on export hopes. Theoretically a weaker U.S. dollar makes our products cheaper for foreign buyers. That argument should hold water in a commodity such as wheat. Last year 41% of the wheat we produced was exported. The year prior it was 62%. In a commodity such as pork, it is not as clear. During the month of June only 16% of the pork we produced was exported. On the pork side we will point out the pork cutout, which has been in a downtrend in recent days, posted an 86¢ gain this afternoon. That news, combined with this market’s solid intent on higher prices, should make for continued gains in the near term. We do feel nearbys are being overdone on the upside but will not stand in front of it with short futures yet.
Cattle:
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
