New highs were reached for the July and August lean hog futures on Monday. The trade is still discussing the idea of slackened demand from end users for beef at these higher prices and a little more interest in pork. As we noted a few weeks ago, there is not as much switching between the two than analysts thought years ago but there is something there. It has also been shown in the weekly feature numbers.
New highs for this uptrend were seen for the July and the August hogs on Monday. The July is currently the dominant contract due to the higher open interest numbers. rallying 23% since the start of the year for choice.
The dominant April live cattle futures contract closed down 2.95, just a nickel off limit down. The market really took Friday's Cattle on Feed report to heart. It was interesting to see that cattle broke to near limit down while hogs did just fine today. We just added a few extra cattle into the summer timeframe to compete directly against pork.
We are not suggesting the market has fully ignored Friday's bearish Hogs and Pigs report. It is likely more that with holiday trade this week we saw those new bears from the couple of weeks take a little quick profit.
On Friday, we had a good initial rally to new highs for this uptrend that failed to hold by the close. Today, the market broke hard initially and it rebounded by the close. As with the cattle comments, there is a lot of speculation in this market about any potential pick up in consumer demand next year. Along with some changing perceptions on general demand next year we can also discuss the short term issues at the end user level.
New highs were reached yet again for futures. It is interesting to see how easily this market has put its blinders on regarding this problematic slaughter situation in the Southeast. As long as there is still the talk of lower supplies into November, it is taking a back seat regarding pricing.
It is now National pork month. This month of pork features at the retail counter was started to help each the strain from the heavy supply portion of the year. The effect on this year's pork pricing won't be easy to calculate. We are coming into a very well supplied meat environment.