Hogs: April futures rallied limit-up on Wednesday. Traders are noting South Korean buyers will cram orders in quickly to get product in under the 60,000 tonne no-tariff limit that was announced Tuesday. That is why April rallied so hard compared with the deferred months. June futures hit up to 99.45 today. That is just under the 100.20 record that the June 2009 contract posted when it was trading in the summer of 2008. Traders were excited in the summer of 2008 when China was buying pork for the Olympics.
Cattle: We have long said this market is in for a long-term bull market. Declining supplies for years will soon catch up with us. At the same time, we have a raging beef export market and a returning U.S. consumer. Friday’s bi-annual Cattle report, informally called Cattle Inventory, will set some wayward traders straight. The report will show five years of declines in the beef cattle herd are about to be felt. Allendale says beef cow numbers fell 2.4% from last year. The average trade guess suggests the exact same decline. Cow/calf producers have little interest in expanding. We estimate heifers for the beef cow herd to be 2.4% smaller than last year. Of that number, we calculate beef heifers that will give birth in 2011 to be 2.0% smaller while those being bred this year, for 2012 calving, will be 3.1% smaller. That is not expansion…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.
