Hogs: By all accounts lean hog futures were not ready for a big move higher. Cash hogs have been floundering while cash pork prices, after Tuesday's $1.52 decline, were within pennies of the current low in this recent downtrend. Also, packers have been clearing telling everything they were having trouble moving pork in the future. That was evidenced by their slaughter cutbacks planned from Friday through Tuesday.

The only thing supportive was the new pork trade information. As noted on the AM Livestock Commentary page, the government released good pork export data on Tuesday (on a base metric tonne unit) and converted data on Wednesday (on a carcass based lb. basis). Pork exports during May jumped 18% over last year. This is a big increase from the 0% and +2% numbers in the two previous months.

We knew exports would seem like an unreasonable jump for May compared with 2009 because last year we were dealing with H1N1 export problems. Looking at our export projections, we had previously estimated they would only be up 10% in May and June. Import numbers were not as exciting. In May, imports rose 4% over last year. That was up from -3% and -5% in the two previous months. Overall, this export data is good for hog prices.

Cattle: Higher cash cattle trading started Tuesday in western Nebraska and swept through Kansas. Prices moved up to $93 from last week’s mostly $92 action. Texas even moved numbers at $94! This now marks two weeks in a row of higher cash cattle pricing.

As we have pointed out before, anytime that we are not falling at this time of year is a success. It will also start stirring up talk of an early season low for cash cattle. Typically, cash cattle doesn't bottom from their spring to summer slide until later July.

We have said many times before that we felt August futures had correctly priced in all downside for cash cattle. Our goal was to turn toward buying those undervalued deferred contracts. Have we missed the boat on our "buying for the long term on this summer dip"?

One reason for the move on Tuesday is recently released beef trade data. For the month of May beef exports were 27% over last year! The two previous months were +26% and +30% over last year. Beef imports into the United States were 2% smaller than last year. The two previous months were -10% and -23%. Bottom line is this beef trade situation is overall still positive. We knew futures prices would be higher on Tuesday, but we did not suspect packers would go after cash so aggressively...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. www.allendale-inc.com.