Allendale Livestock Wrap-Up for 3/24/2010
Hogs: We would guess the trade did not like what it saw when the average guess for Friday’s Hogs and Pigs was released this morning. The average trade guess is for the hog herd to be only 98.9% of last year. Allendale’s number is on the low end of estimates at 98.1%. If this report puts a few more hogs on the ground than expected, then it would be fundamental fact #2 that the bears can now point to (#1 would be Monday’s cold storage report). If we also wanted point out shorter term issues we could note wholesale pork prices have been falling (lightly) since March 4 and cash hog prices since March 10. It is also interesting to note April futures have now moved to a discount to the lean hog index (a measure of cash hog prices). This could represent a shift in the trade’s thinking.
Cattle: There was some light cash cattle trading today. While the trade thought action was done for the week by Tuesday afternoon, a few sales were seen this morning from $95 to $97. That may have limited the April from enjoying a rally like the other contracts. We will note from a chart viewpoint it would appear cattle futures have a chance to post a minor comeback into the end of the week. There is nothing wrong with that. Officially, though cash cattle and futures have peaked, wholesale beef is still moving higher. We do not expect it to last much longer but it is there.
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
