Hogs: For the fifth day in a row on Wednesday, wholesale pork fell. The wholesale meat trade is having trouble selling product and just can’t find the right price to make it move yet. Thursday at 2 pm we should see USDA’s monthly Cold Storage report confirm some fears about consumer demand. Pork in warehouses typically increases in February by 22 million lbs. Allendale’s 621 million lb. estimate for end of February stocks implies a 37 million lb. increase. We look for weakness in this market until the first week of April. For trading, wait until April rolls around before jumping on those hog/cattle trades (buying hogs and selling cattle)…Rich Nelson
Cattle: Cash cattle traded at $127 today in the Central and Southern Plains. Nebraska sold a few cattle at $128 (they have been trading at $1 premium for some time). This $127 action was $1 higher than last week and a dramatic turnaround from early week bearish expectations. With such a change for cash cattle, it would appear futures did not care much at all.
April futures are only trying to price in where cash cattle will be at the end of April. Seasonally, it is common for a minor rebound at the end of March. What goes on right now will not change anyone’s opinion on direction after the first week of April (down).
For the short-term, Wednesday's cash cattle trade was a surprise. It gives us hope that the late month rebound we have been discussing could happen. However, don’t in any way believe this is the start of a new bull rally. Cattle feeders are encouraged to hold the hedges we advised on March 2, filled at 127.37, on the June contract. Cattle feeders holding un-hedged cattle are encouraged to get half locked now to place orders for the remaining half at 125.00. We could still get a short-term rebound. If it does, get busy with sales…Rich Nelson