Allendale Livestock Wrap-Up for April 7, 2010
Hogs: Hogs gained a little from the live cattle rally today. Overall, there is not much of a change to speak of here on the news side. Though cash hog prices fell today it is likely in reaction to yesterday’s too high price gains. Our overall message remains unchanged. We are using $87 as our objective for the June futures. -- Rich Nelson
Cattle: It was surprising to see packers come out so aggressively late yesterday afternoon. Cash cattle ran a strong $4 higher to $100 in the central and southern plains. This broke those $98 cash cattle highs that were posted three weeks ago. The reasons for the recent rally are still the same issues we have had for weeks now.
Packers are concerned about storm-impacted supplies and are seeing better beef exports and potentially U.S. consumer demand. Part of this week’s rally has been due to news that the secretary of agriculture was in Japan. The meat trade has noted that U.S. negotiators have worked magic this year. They got Russia to end its ban on U.S. pork. They got the Chinese to end their official ban on U.S. pork from the swine flu days. They are now hoping the U.S. can do the impossible: convince the Japanese, who are incredibly food-safety focused, that U.S. beef is safe enough to up its age restriction.
The key thing we are noting for the next few weeks is the supply situation should change soon. More cattle showing up seasonally will be an issue here. Based on the last two weeks of slaughter stats, we don’t see anything that suggests this seasonal flow to the processing plants has been interrupted. -- Rich Nelson
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.