Hogs: Wednesday marked the first setback for futures after their four-day run. You could argue the morning’s release of June pork exports and imports should have had a bullish effect but failed to push the market. June exports were 1% higher than last year. It may not sound like much but is better than the 12% decline and 4% decline respectively for the previous two months. Pork imports, at 6% higher than last year, were at least a small decline from the 8% higher and 16% higher growth in the previous two months.
As a whole, this second quarter wraps up at only 6% lower than last year. Allendale had been estimating a 9% decline. So here is some good news but the market did not react. The trade’s focus remains on the short term issues here.
Cash pork broke a little and cash hogs posted a slight decline as well. We still suggest the August contract may be priced a little too high but we still don’t feel comfortable selling it for trading. Instead, the long term picture here is our focus. Feed costs will drop sharply and expansion will take hold for the 2014 picture. We are likely wrapping up this “last chance” rally into August.
Cattle: Wednesday’s release of June beef exports and imports may have helped change some minds. We had concerns before the release as both April and May numbers were not that great (-13% and +4% respectively vs. last year). These recent numbers showed a good rebound at a 12% increase. Generally good news was seen for imports as well. April and May numbers were +9% and -16% respectively vs. last year. The new June numbers were 10% lower. So, better export and better imports than expected.
Cash cattle will likely start out steady at $120 Thursday. We would assume cattle feeders are ready to start positioning bids quite a bit higher A small piece of good news was that Wednesday marked the second day of higher wholesale beef prices (both choice and select). That does not mean a bottom is guaranteed. It is a piece of the puzzle, though. On the charts, the market posted an outside day, which closed higher. There are a lot of things suggesting this is the right time to get this year’s summer low posted. We are simply waiting for confirmation.