Cash hogs follow seasonal tendency lower, while cattle is mixed

Japan ups age for cattle purchases

Cattle herd Cattle herd

Hogs: October hog futures have done a pretty good job of guessing where cash hogs will be, in our point of view. The cash hog market typically posts a good decline in cash hog pricing into the first week of September, and that is what has happened. Examining cash hog prices good through Tuesday, a less-than $4 discount, is currently implied.

With strong declines posted Wednesday for cash hogs and cash pork, -1.82 and -2.57, respectively, cash hogs will be getting very close to futures. This news sounds a little bearish, and it is. However, keep in mind this week is the normal time for cash hogs to bottom. Additionally, after several weeks of larger-than-needed marketings, we are about on the brink of switching to supply deficits in market-ready hogs. We are slightly supportive for the month of September…Rich Nelson

Cattle: News that Japan’s Food Safety Commission recommended raising the minimum age of cattle for U.S. beef purchases is great to hear. It will be a few months before this translates into purchases, but it is good news nonetheless. Japan used to be our top customer with more than 1 billion pounds annually purchased. For market direction, while we can’t argue with clear market signals, which are bullish, we would rather suggest more of a mixed tone this month…Rich Nelson

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.

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