Hogs: The hog market saw a mixed trade on Wednesday as a higher U.S. dollar and China demand concerns pressured the deferred contracts while the August contract was supported by record high pork prices.
Demand for hogs has been constant, even when negative weather and a weak economy should have tempered demand by historical standards. Reports out of China show that the country's economy might be finally slowing. The trade is concerned that this might lessen demand for meat there.
Demand for meats has been growing steadily in China over the past few years with consumption of pork the highest per capita. It is this demand for pork that has driven pork prices in China to record highs. These high prices intern have given the trade hope that China would purchase U.S. product to cool down their surging prices. This perceived demand has helped drive up the price for the U.S product.
Cattle: Friday’s cattle on feed report showed that cattle placements came in at 104.1% of last year. This was way higher than the trade-expected number of 94%. With the whole Southern Plains in a severe drought, there was no grass to feed so the cattle had to go somewhere and they went to the feed lots.
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.