Another Huge Cattle Slaughter Coming Down the Pipe

by Archer Financial Services | May 08, 2018

by Dennis Smith
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Cash is called fully steady with a firm tone. Some mechanical problems yesterday will result in a larger Saturday effort. Packers still need hogs for late week delivery and the supply of butchers is getting tighter. Last week’s kill was revised downward by 5,000 and in combination with yesterday’s kill of only 449,000 should work to clean up the product. What stands out to me is the strong performance of the bull hog spreads with the June contract gaining on everything. This tells me the cash is ready to move higher. This week’s kill is projected to come in at 2.332 million compared to 2.327 last week. A closer over 7560 in the June is necessary to trigger large buyers.


This week’s kill is projected to be another huge effort at 646,000 compared to last week’s kill of 647,000. The show list is larger with numbers up 12,000 in NE, up 7,000 in KS, unchanged in CO and down 1,000 in TX. There’s no read yet on the cash steer market for this week. It likely will be lower. Futures can’t hold a rally and we continue to strongly recommend hedging in the Aug and Oct timeframe on any bump. We’ve already hedged the feeders. They will not hold up this summer when cash steer prices drop hard. We continue to hold the bull spread, long Jun/Aug LC as we have no hedges established against the June contract. Look for a two-sided trade. The beef is trading at its highest level since June 26th. Once seasonal demand is complete, this is not going to end well.

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