Hogs: Cash hogs began to fold by mid morning. Lower prices were seen by the end of the day in most locations. Processors are taking a hard line on prices now that wholesale pork prices are faltering. Four days of lower pork prices can now be counted. Helping to cushion the blow from this news is USDA’s morning report. As we noted on the AM Livestock Fundamentals page, they reduced their estimate of pork production from 2010. Pork left for the US consumer in 2010 will now fall by a good 4.9% from last year.
Cattle: USDA lowered some import estimates on their balance sheet and tightened the supply picture a little. Beef left in the United States for our consumers will total 1.4% smaller in 2010 than 2009. That number should not be a surprise to anyone though. While the USDA news is good, this market has its focus elsewhere. Bulls are arguing wet conditions in the plains are worth a second leg up in prices. Bears are wondering how much longer can prices hold these high levels? We all know beef demand return in an economic recovery but how quickly will it really happen?
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