Hogs: While we are still waiting for an official sign of a short-term top in cash hogs or pork, which should be happening in the next 10 days, the market is already turning its attention to lower prices ahead. As the summer hog market breaks, futures will also take some of the inflated premium out of deferreds. We are bearish the October and December.
Cattle: The amount of beef offered to the US consumer each year is what’s “left over” after exports/imports. 2012 beef supply to the US consumer will fall a sharp 4% from this year! Demand for that beef, which rose in 2010, rose slightly this year, and will rise very slightly next year. Supply is the focus here. Even assuming demand does not improve, we have the makings of a bull market…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.