Allendale Livestock Wrap-Up for 1/28/2010
Hogs: Though futures took a break from the recent heavy selling, we cannot say this market is out of the woods completely. We see this afternoon the pork cutout fell another $1.92. That would still imply there could be more pressure into the end of the week. On the slaughter side, USDA indicated plants were pretty much back to snuff with a 428,000 head figure posted today. One surprise is the talk of only 100,000 head being reported for Saturday’s kill. Packers would not make up for this week’s weather related shortfall with that type of low number. That shows clearly, they are very concerned about this margin situation. Wholesale pork has lost $6.62 in just the last three days!
Cattle: Bears are still temporarily running this show. Wholesale beef broke again on this afternoon’s report. It was down $1.87 in choice and $1.89 for select. The trade is still clearly noting demand is a renewed concern. Obama’s plans for the nation and potential weakness on the lower end products, such as ground beef due to extra poultry in the United States are key issues. One thing we will be watching closely is cash cattle action. Bids were $84 against asking prices of $87 and $88. The bulk of last week’s trades were at $85 while the late Texas sales ended at $86. Given the drop in beef prices, we would imagine steady prices, around $85, at best will be seen. We would not be surprised if they can wrangle an $84 bid out of someone. The cattle inventory report will be out on Friday at 2 pm. It is expected to shoe moderately supportive supply information.
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