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Beef Producers Culling Cows Aggressively

by AFS Archer Financial Svcs | Apr 09, 2019

by Dennis Smith
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LEAN HOGS

News is quiet early today. I’m not hearing anything new or different at the moment. Consider the weekly kill is projected to only be 2.425 million pigs. With the new demand curve for U.S. pork, 2.4 million is not enough pigs. Cutout was up $1.45 and I’d expect additional gains in the hog carcass this week. Futures corrected downward yesterday but actually gave up very little real estate. Volume was 66,000 with open interest rising by 2,800. Nice build in open interest in the fall and winter contracts. I’m wondering if the USDA will revised projected exports for this year in the monthly supply/demand meat table. Look for a mixed trade but don’t be surprised with a higher close.

LIVE CATTLE

On the backside of a very tough winter producers are liquidating beef cows. The week ending March 23rd the cow kill was the largest weekly kill going back to January of 2014. For any week in March, this weekly cow kill was the largest cull since 1985. Secretary of Ag estimates that nearly 1 million calves have been lost due to winter and/or flooding. Sadly, old man winter is not finished. A major storm is slated for later this week. Year-to-date beef production is down compared to last year. Weights will continue to drop for another 40 to 50 days. Seasonal demand is finally surfacing. Choice beef was higher yesterday (up $1.74) and also gained nicely on the select which is my confirmation of seasonal demand kicking into gear. There were zero deliveries. I’m pretty much alone on this outlook but I’m bullish and expecting an impressive rally. I consider the charts bullish. Don’t be surprised to see the USDA lower projected production for this year in their meat supply/demand table scheduled for release today at 11:00 Chicago time.  

For a free 30-day trial to the evening livestock wire please send an email to: dennis.smith@archerfinancials.com  

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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