Hogs: Most estimates for Friday’s report should be in hands by now. Ours were sent out Tuesday morning. At this point, it still appears the breeding herd is not ready for expansion, even after producers have been making solid gains. Sow slaughter from June through August was down 14% over last year. We look for the Sept. 1 breeding herd to be 1.4% smaller than last year. We have the Kept for Marketing numbers ranging from 5.5% lower (+180#) on up to 0.9% lower for the <50# category. From this, we can now make estimates for pork production and price. Our initial guess is that the objective for October futures will be upped to the $75 range. Out on Wednesday afternoon will be the monthly Cold Storage report.
Cattle: For around three weeks now we have seen daily losses in wholesale beef prices. Tuesday was no exception with mixed to lower trade. Cash cattle traded steady at $98 Monday and more were sold at that price on Tuesday. Bottom line here is beef production numbers will stay over last year's levels through the end of the year due to the past six months of lower placement numbers. Another concern is exports. While we mostly track actual shipments, many in the trade watch the sales numbers. Two weeks ago they were 8% lower than last year. Thursday’s report said they were 56% lower than last year. Don’t underestimate the importance of that. We have these high prices primarily because of low imports and high exports. We cannot pull the trigger on our long-term bullish hopes...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.