Hogs: Considering traders had Monday's bearish pork cutout decline to deal with Tuesday, the futures action was not that bad. They have been heartened to see cash hogs trading steady to $1 higher nationwide. We may need to see another day of lower pork pricing before hog prices are affected. One thing we will point out here is USDA’s slaughter came in at 393,000 head. The three analysts, one of which is ourselves, who provide Dow Jones newswire with daily slaughter estimates were looking for a 404,000 head run. We have not heard about the reason for this lower number yet. For now, we will assume it was a plant problem and not a packer actively slowing down due to pork price concerns.
Cattle: Kansas traded cattle Tuesday at $91. That was down from last week’s $92 to $93 trade that was seen in live based areas. Typically on Cattle on Feed weeks, we see feedlots try to hold out until the end of the week. This month’s unusual report may be spooking some in the industry. Allendale looks for placements of calves and feeders into feedlots during May to be up 15.2% from last year in the same month. That sounds like a big amount, and it is. However, newswire reporters are telling us most analysts are using something like a 17% to 37% gain! Before you get your shorts all up in a bunch, consider this. We are comparing this May 2010 Placement number with May 2009. May 2009 was a very low number as it was 13.8% smaller than 2008. Calves and feeders placed in May will finish out from September to January…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.