Hogs: Our goal for this week is not to get a rally started but to at least say selling has finally finished. The wholesale meat trade has done a relatively quick adjustment to lower demand levels. We may see futures stabilize Thursday or Friday. If or when the weather pattern changes, we can then say this market is ready to see better demand. As noted earlier this week, we are concerned that much of this pork belly price decline is due to high gas prices. That would imply this market may not make up all of the lost pricing from recent days.
Cattle: Active cash yesterday was at $115. At current futures settlements, June is implying cash will fall to $110 at the end of June and rebound to $112 at the end of August. The trade is feeling this should be enough of a discount. Given our downside objective of $106 there may still be room to fall…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.