by Dennis Smith
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Cash came in fully steady to up .25 on the late report yesterday. Volume of negotiated receipts on Tuesday and Wednesday has been very large with prices steady and not lower as expected. It would appear the supplies of butchers is much tighter than expected. The cash call for today is steady. The cutout was down .32 at $77.54. Product trade was active especially in butts. Futures closed limit bid in the Dec and Feb and open interest on the surge higher was up 1,700 cars. Hogs will trade on expanded limits today. Look for Dec to open around 50 higher today putting prices at 5800 which is the line in the sand. Bearish traders will be active at this level as they were last week. Weekly pork export sales were up 1% from the 4-week average. Hong Kong was in for a chunk of U.S. pork. Shipments were stronger, up 21% and again Hong Kong received a chunk of pork in shipments last week.
There were six deliveries against the cash and carry Oct LC contract. Open interest stands at 2,500 cars. Don’t be involved here unless you intend to make or take delivery. The USDA reported about 1000 head trading in IA yesterday at $175. There were no other trades reported. LC closed higher with the most active Dec closing above our stated resistance level of 11810. Open interest on the higher performance was up just over 1,000 contracts. Beef continues to march higher with the choice cutout up $1.11 and priced at $211.39. Beef demand is the driver and this should continue. End users are booking beef aggressively out front. It would appear they consider current prices “value”. Weekly beef exports were sluggish. Export sales were down 15% from the 4-week average while shipments were down 5%. I’m expecting the cash steer market to jump higher and possibly substantially higher today or tomorrow. Asking prices for the smaller show list reside at $1.14 and $1.15 and this price will likely be achieved. Look for upside follow through today.
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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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