Allendale Livestock Wrap-Up for 3/31/2010
Hogs: New contract highs were posted for the May through October contracts. Traders have seen three higher openings in reaction to Friday’s Hogs and Pigs report. We will point out today’s close was not that impressive for the June and beyond contracts. After all of the trading was finished many contracts ended right where they opened.
Live Cattle: Moderately higher trade was seen in the nearby contracts. Traders are hoping cash cattle will gain $1 from last week’s $96 action.
Feeders: It may have been confusing to see live cattle post only moderate gains but feeders post a big close like all heck was breaking loose. There are two things going on right now. The first issue is cattle feeders are bulled up and have been staying a little later at the sale barn in recent weeks. The national feeder cattle sales report indicates that through the 26th, sales have been up 14.5% over last year in this month. That does not automatically translate into a 15% jump in March placements but does indicate which way they are leaning right now. Cattle feeders got bulled up by lower corn prices and the recent fat cattle rally. Given their ideas that corn is taking a second leg down, their enthusiasm jumps even more. Lower corn cost makes them eager to buy feeders to place. At the same time backgrounders, cattlemen who buy lighter feeders to run on grass for a few months, have been salivating over the idea of running cattle on this year’s great pasture condition. The net effect is feeder prices at the sale barn are running a full 13% over last year in the same week. We fully realize this is an exciting time on the feeder end but fully recommend feeder sellers to work on sales or hedge future sales.
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