Hog prices see warning sign, while wholesale cattle at record

Hog and cattle fundamentals

Hogs: We have a big warning sign to report today. We feel the recent September-to-October rebound in prices is now over. Wholesale pork prices have closed lower in four of the last five sessions. Wednesday’s decline was a strong 1.99 drop! Though cash hogs have not made a definitive top yet, we suggest it won’t be too far behind. Our working downside estimate for December lean hog futures is 74.00. We are short this market for speculative trading and suggest hedgers wrap up all un-priced hogs that will be marketed between now and February…Rich Nelson
Cattle: One thing that has impressed us here is that even though Friday’s COF report indicated we had a few more cattle around, wholesale beef has been telling a different story. Wednesday’s 199.38 choice beef quote is just a hair under the psychological $200 mark, and it is a new record. Select has been lagging and is still well off the 195.15 high posted this spring. Bottom line here is the cash beef market certainly does not feel like there is any glut of cattle around. Bids for cash cattle Wednesday were $124. Asking prices were generally $128. Last week’s action was $127. Allendale still is bullish the cattle in the long term and will be looking to buy into breaks on the deferred contracts if any more develop…Rich Nelson

About the Author

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.