Hogs: This week’s kill will top the psychological 2 million head mark. If it comes in around 2.033 million, as we expect, it will be the largest since April 24. Those of you looking at us through our website will see a chart of weekly slaughter rates. If slaughter rates appear like a V (with the lowest kills of the year in the summer) then we are now working on the right hand side of the V with increasing supplies.
Cattle: Cash cattle started trading Monday at $93 but moved up to $95 when it was all said and done. We suspect the majority of the action was done at $95. With that $2 jump in prices in mind, it is surprising futures did not jump sharply. At this point, the trade is still viewing this as a short-term issue. August futures are implying $93 cash at the end of the month when you add in a normal basis. Overall, the past three weeks of cash cattle and futures action has been better than we expected. We still like the idea of being long-term bullish but do not feel comfortable buying at these levels. When the financial market is all a flutter about reducing economic growth expectations, and the Federal Reserve is doing the same, we cannot say we are 100% confident on beef demand right now…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.