Hogs: Our 10-year average of the lean hog index, a measure of cash hog prices, shows the seasonal low on this dip on March 28. Given the big decline we have already seen, we wonder if this market will wait that long. Cash hog prices in recent days have been stabilizing. After we clear up Monday’s snow-related slaughter decline, in the coming days packers will be buying for full kill weeks.
This market has about priced in concerns with Russia and Chinese pork purchases. We still suggest a piece of news here would be a slight dip in market ready numbers as we feel last year’s summer heat may have affected the breeding herd.
In other news, the Agriculture Undersecretary told the House Appropriations subcommittee that furloughs would cover all affected employees on one day a total of 11 times. The furloughs would not be on consecutive days…Rich Nelson
Cattle: So far, you must say April futures, still the dominant contract, remain locked in a downtrend. With the big change in mindset on demand, from the U.S. consumer to exports, and to USDA’s packer plant shutdowns from the sequester, futures have repriced themselves sharply lower. It was as recent as Monday that futures made new lows for the current downtrend. The good news here is this market has about priced in what you would expect it to do.
Based on our expectations for slaughter declines in front of us, we would expect current prices may be a little under-priced. Cattle slaughter has been lower than last year for five weeks in a row now. That will continue in the coming weeks.
On the pricing end, a lot of people have been questioning whether choice boxed beef will break $200, and if so by how much? Wednesday's quote was $197.49, so $200 should be a good target, but we are not sure how far prices can extend past that. The real question is actually select grade. At $196 it holds almost no discount.
On the live cattle end, futures are pricing in cash cattle at $128 from now through early April. We suggest higher trade will happen ($132 on April futures/$133 cash cattle peak)..Rich Nelson