by Dennis Smith
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Cut right to the chase today with what matters….weekly pork export sales were huge at 35,700 MT, up 69% from last week. Despite the tariff on U.S. pork, Mexico was in for nearly half of the total sales. We’ve been commenting that ham prices are so cheap that a purchase can be made, the tariff paid, and prices are still lower to Mexico than they were this time last year. Pork is priced to move and move it will. Shipments were 18,800 MT or up 4%. Futures (Oct) tried to score a reversal bottom yesterday but stumbled late and closed unchanged. Perhaps today the market can give it another go. Cash should be lower. Bellies appear to have dropped to levels that are stimulating demand. Stability in fresh belly prices is the first step toward recovery.
Look for a higher open today in LC. Futures surged higher just after the 1:00 close on Wednesday. Very light cash trade has been recorded at $1.10. Packers are hesitant but it appears feedlots will hold the line with asking prices steadfast at $1.14. Aug futures hold too much of the discount in our opinion. We’re holding the Aug/Oct bull spread. At the same time, given a test of $111.00 today in the Oct and we’ll move into some hedges for fall production. Long term we’re bullish. FC closed strong yesterday after retreating toward the July lows. Long liquidation was evident here with total open interest dropping in feeders to the tune of 1,080 contracts. Wholesale beef is in fairly good shape with the exception of loin cuts which are being discounted to move. It does appear that packers are feeling good fall demand for U.S. beef. Weekly export sales were very respectable at 16,200 MT, up 36% from the 4-week average. Shipments were up 4%.
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