Hogs: It is likely that most of the reason for higher trade on Wednesday was from hog traders playing off strong cattle contracts. Theoretically, higher-priced beef means pork appears to be a deal. We will not discount the better cash hog pricing in the past two days, which is welcome, but this is certainly a beef deal. It is interesting to see lean hog futures are now at two week highs. That is something to say for a market that was breaking further than expected…Rich Nelson
Cattle: We have been right the direction of this short-term market (up) but have been surprised by the strength behind it. Nebraska traded cattle $7 to $8 dressed at $188. Kansas through Texas started trading at $118, up $5, an hour or so later! So why is this happening? The key issue is still available feedlots supplies. We know clearly this is a supply issue right now. Steer carcass weights were 9 lbs. higher than last year starting in January. That premium was down to 3 lbs. three weeks ago. It is likely they are even with last year right now. Heifer carcasses were 12 lbs. higher in January, 3 lbs. heavier three weeks ago, are now likely even with last year…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.