Feed costs drive hogs, weather a factor in cattle

Hogs: The breakdown of this year’s breeding herd changes was interesting. In September, corn belt producers had added 2.0% more numbers while those outside the corn belt were in light liquidation (1.4%). You would assume with feed costs remaining at the high end of historical values, this may continue into mid-2012. For shorter term pricing, we are still holding for $84 on the December…Rich Nelson

Cattle: Many clients have expressed indignation about the two tiered pricing pattern seen in recent weeks. On a live basis, the Central and Northern Plains traded cattle at $2 to $3 higher than Texas. The explanation comes from this summer’s weather. Since the big July heat wave hit, the Southern Plains have been packing feedlots with young calves and feeders. Feedlots in Texas, Oklahoma, and Arizona are holding 11% more cattle than last year. Conversely, the Central and Northern Plains are holding only 1% more. Expect this two tiered structure to last for another six months...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.

About the Author
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.

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