Hogs: Another stronger than expected slaughter run was seen. Both Tuesday and Wednesday's hit 411,000 daily kill levels. The morning cash hog report even implied higher prices were seen. We will have to see the afternoon meat report but for now have to suggest if cash hogs are slowing their decline, and cash pork holds its ground, then futures could do the same. We are still looking for cash hog prices to bottom around the 7th or so then rebound into late June/July. We may be interested in working on hedges for late year hogs on another rebound...Rich Nelson
Cattle: Wednesday morning we noted some surprise that packers were already set to start bids at $93. Last week saw $93 with a few $94 sales. During the trading session, word moved fast that Texas/Oklahoma was seeing some light $94 action. This is a good sign from last week’s $3 loss. Part of that action was set from the 200 point rally in the Dow. Better confidence on the overall economy can translate into better beef demand. We don’t like the idea of cattle futures trading exactly in tune with the stock market as the relationship between the economy and beef demand is not exactly that perfect. However, it is what this market believes so we must pay attention. While this is all good news for now, it does little to change our overall direction into summer. We view $90 as our target for cash cattle prices in July and that futures already have the correct downside plugged in. That means a sloppy futures market in front of us...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.