Hogs: June futures were able to crawl their way back $3.70 from the early May lows. Better hopes on gas prices, forecasts for warmer temps in the future, and expectations for low pork production all helped. In just the last two days, most of those gains have been erased. The July and all other deferred months erased all those gains and more, and then closed to new lows for the downtrend. Traders are concerned about the post-Memorial Day demand environment and also over the buildup in storage. Even if the weather does improve, some suggest we will not be able to chew through the extra supplies put into storage in the past four weeks.
Cattle: The post-pit trade on the electronic contract hit $106 on Wednesday. That fulfilled our original downside price target. This bearish expectation has been in place for months. In the past week, we mentioned this $106 was likely too low given the weaker-than-expected domestic demand…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.