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Huge Volume Session Wednesday in Both LC and LH

by Archer Financial Services | May 10, 2018

by Dennis Smith
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LEAN HOGS

Cash is called higher for today on the heels of a higher cash performance yesterday. It was not all clear yesterday with cash quoted down $1.25 at noon on Wednesday. Packers would love to continue sitting on cash bids but it’s not going to happen. Supplies are getting tight and processing next week will be for the surge in demand for Memorial Day. Futures volume was very large yesterday at over 84,000. In fact, this is the largest volume session this entire year. Open interest dropped hard suggesting the funds are exiting short positons. Open interest in the June dropped by over 8,200 with total open interest down almost the same amount. Today is the last day of the Goldman Roll. Look for the higher cash from yesterday in tandem with higher cutout and the outlook for higher cash today to jump-start the June on today’s open. Weekly pork export sales were lousy, down 21% from the 4-week average with shipments down 3%.

LIVE CATTLE

LC futures saw a huge volume session yesterday at 111,000, the largest volume session since the lows were established in early April. The Goldman played a big role yesterday with OI in the Jun down by over 12,000. Total open interest was near unchanged, down 857. The impressive item was the fact that June continued to gain on the Aug in the middle of this fund roll. Cash steer prices, in a trickle, are trading lower for late May or early June delivery. Packers have cattle around them. Look for a break in the cash when it does break loose either today or Friday. Weekly beef export sales were poor, down 41% from the 4-week average with actual shipments much better, up 8%. We’d hoped to see the Aug trade above 10500 this week to add to hedges but this appears very unlikely after yesterday’s romp. Hope for a two-sided trade but expect a lower close.

  
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The risk of loss in trading futures and options on futures can be substantial. The author does not guarantee the accuracy of the above information, although it is believed that the sources are reliable and the information accurate. The author assumes no liability or responsibility for direct or indirect, special, consequential or incidental damages or for any other damages relating or arising out of any action taken as a result of any information or advice contained in this commentary. The author disclaims any express or implied liability or responsibility for any action taken, which is solely at the liability and responsibility of the user. In addition, the author of this piece currently trades for his own account and may have financial interest in the following derivative products: (corn, soybeans, soybean meal, soybean oil, lean hogs, live cattle, feeder cattle).

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