Hogs: With volume low, traders are able to push this market pretty well. Nearby futures closed near limit up Wednesday on word from Chinese officials that they would need to refill government stockpiles. Sugar, meats and other staples were mentioned. Hog futures did a fair job in rallying because China is already an established customer of the United States.
Year to date China, both mainland and Hong Kong combined, has purchased 8% of U.S. pork exports. In the third quarter they were our fifth largest buyer. Another point of surprise was on the cash hog side. Tuesday afternoon’s USDA reports reversed the morning trade and posted higher trade. Wednesday, cash hogs are higher again.
Cattle: Along with hogs, cattle futures did pretty well on the China news. Traders perhaps reacted a little too strongly to the news. Packers stretched out and bought cattle not at $1 higher, $2 higher, or even $3 higher. Cash cattle traded from $101 on up to $104 Wednesday. While we don’t like rallying on weak news stories like the China one here, we have no problem with the direction. Our $110 expectation on the April was filled. Remain supportive to this market…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.
