by Dennis Smith
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Packers are now spreading the word, talking openly and boldly that supplies will remain a burden for the entire month. Rarely do packers divulge such information and rarely are they telling the truth when they do. Perhaps we’ll see a sharp drop in weights 24 hours from now hinting that we’re almost through the backlogged supply. The first day of the Goldman Roll saw large volume of trade, reported at 98,700 with open interest down 6,000 on the bearish performance. Index funds are rolling out of Aug but they don’t appear to be moving into the Oct. July hogs posted a fresh contract low yesterday. We have no futures positions from the long side but we’re still holding some bullish Oct option positions. We’re waiting for a bottom to develop.
The Goldman Roll saw volume in LC futures yesterday active at 86,900 with open interest down 3,600. Funds are rolling out of Aug and into the Oct. Live cattle probed the upper end in an attempt of an upside breakout. It did not materialize. Support is 100 points lower. I don’t have show list numbers this week. The weekly kill is projected to be 660,000 or up from 650,000 last year. Weights have bottomed and beef is expected to trade lower this week. The jury is out regarding the direction of the cash steer market. I don’t have a strong opinion on this week’s cash. IMO the futures market has bottomed. ON weakness I want out of short feeder positions we have on the book and we’ll continue to unwind cattle hedges.
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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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