Hogs: Even though cash pork took a hit Tuesday, and was down another 0.67 on Wednesday, futures held their ground well. The reason is not too hard to see. October carries a sizable discount to current cash hogs. Though a discount is certainly needed due to the coming larger supply, we will point out September could see a minor marketing hole in available numbers as well as procurement for National Pork Month. We are long hogs…Rich Nelson
Cattle: Wednesday’s futures market rebound was a surprise. Wholesale beef ended the day 99 cents lower for both choice and select. Cash cattle traded lightly in the North at $187, which was down $1 from last week. We would rather chalk Wednesday’s futures action up to changing perceptions over cash cattle prices.
Keep in mind futures were pricing in a potential drop in cash cattle into the end of the month. Wednesday’s higher futures close on the August, at 119.40, and a normal basis for the last week of August of -1.52, would imply the market looks for cash cattle at 118.00. That can be compared with last week’s 120.00 and 121.00 action.
We won’t say futures rallied because the market is now bullish. We would rather suggest futures had previous expectations that were too bearish. For now, we remain neutral to slightly bearish for the next two weeks on the slump in demand for post-holiday. By mid-September we look to restart our long-term bullish expectations…Rich Nelson