Hogs: There are three things to consider when evaluating cash hog and futures prices right now. 1) The early closure of the Smithfield plant in Iowa did affect hog prices for around five days. 2) Projections on hog slaughter changed sharply due to the March Hogs and Pigs report. Instead of hog slaughter running 2% lower in the summer it will dip as low as 4% lower. 3) Intense fieldwork is keeping hog/grain producers out of the finishing barn right now. The last two factors are the reason cash hog and wholesale pork prices have skyrocketed in recent days.
Cattle: The trade is convinced cash cattle will be able to trade $1 higher this week. It is not hard to see why. As we noted yesterday afternoon, beef prices are still crawling out some gains this week. More money in the beef means more money available for cattle. The other piece of news we are sifting through is Friday’s Cattle on Feed report. On the Livestock Fundamentals page of this report you can see the average guess and Allendale’s estimates. It will show marketings were big last month but that producers went through a lot of cattle into feedlots. That is supportive the nearby but bearish deferreds…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.