Production moves hogs, while cattle watch weather

Hogs: One thing remarkable about this market has been how well pork production has been following expectations. The past four weeks have been running 0.3% over last year. This 0%-1% increase will be seen for the next month or two. As you can see for the month of December, we have three weeks left of big 475 million head production levels then two holiday related shortfalls. The overall message, though, is that production will ease soon. Though 2012 will run higher production levels than 2011, after considering demand, the amount U.S. consumers see may be a little less…Rich Nelson

Cattle: Forecasters are still keeping the implied three to six inches of snow in the forecast for portions of the Plains. Those new to cattle futures trading need to know this can have a short but potentially long-term impact. Feedlots clogged with snow spend more time clearing out pens and alleys than loading trucks for delivery to the packing plant. This can cause a bump up in cash cattle prices. If the storm is bad enough, it can impact weight gains for several weeks afterward. If this storm has a mix of rain/sleet then freezing temps it could be an issue. Keep in mind the feedlot mix this year holds a much larger mix of younger calves, which don’t take stress well. Expect this higher price range into Friday. For now, this does not erase the normal pressure the cattle market feels in December...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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