Archive for the ‘Livestock Futures’ Category

Signs of increasing demand for US pork supplies have given hog futures a big boost today.  Hog futures have been choppy these past two months, and now pork prices are testing recent resistance levels.

Yesterday, USDA data reflected pork prices rising almost 1% to 90.7 cents per pound – the highest since last summer.  So far this year, pork prices are up a reported 10% as meatpackers show an increase of hogs entering slaughter by 1% than this time last year.
            
“Tighter pork supplies are expected to continue through May and into June, lending support to hog futures.  Last year’s drought caused breeding problems resulting in fewer hogs available, while demand remains strong,” said Barb Levy, chief director for Futures & Options Xecution’s futures division in Chicago, regarding the current hog futures situation.

The technical trend for hog futures is up, but has been choppy over the last two months.  In order for me to enter long hog futures, I’m going to need a pull-back in price, or a lower-risk entry.  Patience is key.

There is a current outlook surfacing that US beef supplies will not be able to keep up with demand.  Cattle futures may already be responding to this view as it seems to be finding support at these levels.

The USDA has reported just yesterday that wholesale beef is the highest its been in almost seven weeks, and that domestic beef production is expected to drop 4% this year.  This is after the US cattle-herd sunk to a 61-year low at the beginning of the year – according to the USDA.
            
“Seasonable temperatures will bring about higher consumer demand for beef. Cattle supplies are well below average, and this is going to keep (beef) prices well supported as we go through the summer grilling season,” said Kevin Craney, a senior commodities broker at RJO Futures in Chicago, in a recent e-mail exchange, regarding the current cattle futures situation.  Craney added, “Look for higher (beef) prices as we get closer to summer.”

The trend for cattle futures has just turned up recently according to my work.  We are currently long cattle futures in anticipation of this new trend continuing to emerge.

For five years now, there has been a global high inventory of pork with no balance yet in sight.  Although domestic pork exports are down the most in a decade, US hog farmers are set to produce yet another record amount pork.

The USDA estimates a record 10.66M metric tons meat not seen in over 40 years.  This comes at a time when US exports of pork have fallen a reported 14% in the first two months alone – the most since 2000.            

“Pork prices have seen a steady decline since Dec 2012.  With exports being down and pork production at highs, I would expect a continued bearish market,” said Jim Allen, licensed futures & Forex broker at Foremost Trading in Geneva IL, regarding the current hog futures situation.

In my work hog futures are at a crossroads, barely hanging on to their uptrend that looked to commence at the beginning of the month.  We are long hog futures and are using tight stops.

There is now the outlook of tightening domestic supplies of beef (and perceived forthcoming higher beef prices) thanks to the reporting of the USDA yesterday.  Cattle futures retreated today from their recent slide.

Specifically, the USDA stated yesterday they expect domestic beef production a little less than 1% from last month’s estimate, and 4% total less than last years.  The entire domestic cattle-herd, coming into this year, has been the smallest since the early 1950′s.          

“The sheer amount of cattle available for slaughter remains very tight as we move into the 2nd quarter of 2013,” said Kevin Riordan, director of research at Capital Trading Group in Chicago, regarding the current cattle futures situation.

The trend for cattle futures remains down, but feeders appear to be turning the corner.  As long as cattle futures remain a mixed-bag, I will await committing to direction until a clearer picture unfolds.

With signs that overseas demand continues to wane, hog futures closed down today for three out of the last four trading sessions.  For the last year (as of yesterday), hog futures are only down just over 3%.

The USDA said yesterday domestic exporters shipped just over 372 metric tones of pork the first two months of this year, which is down 14% from the same time period last year.  What might be contributing to the slack demand is Russia’s ban on US pork because they claim it may be tainted with a feed additive that is used to manipulate muscle mass in livestock.            

Hog futures trend just turned upward before this recent sell-off, and I am still geared toward the long signals.  After last month’s low, hog futures have been making higher-highs and higher low’s, so I’ll be looking for long signals tomorrow.

Hog futures extended their rally off the March 20th lows on the outlook of cheaper US pork creating more demand than more expensive meats.  Since March 20th, hog futures have rallied $5.00CWT which has been the largest showing of strength since last September.

Compared to other meats, wholesale pork prices have declined just over 3% over the past year, while at the same time beef and chicken have risen almost 4% and 8% (respectively) according to the USDA.  The price discrepancies between the meats cannot be overlooked, and hog futures may be bottoming over this revelation (according to my work).

Jim Allen, licensed futures & Forex broker at Foremost Trading in Geneva IL, had this to say regarding the current hog futures situation, “Pork prices are lagging behind the rest of the livestock prices.  This discounted price should lead to more purchasing and lift prices in comparison to the beef and poultry markets.”  Allen added, “I would look for a a rally at least until pork (prices) catches up.”

The trend for hog futures is technically down and more price structure needs to happen before the trend can change – in my view.  I am looking for short signals with the overall trend in hog futures in the near-term.

There seems to be an outlook for a cooler summer this year because this speculation has hit the cattle futures market and extended the current losses.  Further speculation for lower cattle futures is that the cooler will lower the prospects for grilling outdoors.

It’s no secret warmer weather promotes outdoor grilling, but colder weather is expected to continue though out the month across the Midwest to the east coast.  According to a respected weather service, they are expecting temperatures to cool anywhere between 8 to 14 degrees below normal.

Kevin Craney, a senior commodities broker for RJO Futures in Chicago, had this to say regarding the current cattle futures situation, “As winter temperatures continue to linger into spring demand for beef is being curtailed. Cattle (futures) have been in a downward trend, and this lack of demand will continue to fuel that trend.”

The trend for cattle futures is down is nothing but DOWN with new lows reach just today.  These new lows in cattle futures implies “no bottom” yet in sight, but before hopping on board I will require a pull-back higher in cattle prices.

There is an outlook that demand for domestic pork is declining somewhat, and hog futures have been in decline for most of the week.  Hog futures have been trading between last weeks price range of $95.50 and $87.50CWT.

The USDA shows wholesale pork prices down nearly 5% this year, and spot pork prices falling to the lowest price this week of nearly $74CWT.  The amount of hogs processed the first three days this week has been down just over 1% from last week.

Christian Moreno, a commodities broker for HighGround Trading Group in Chicago, had this to say regarding the current hog futures situation, “The cash (hog) market is weak.  The dollar has been quite strong and hog (futures) are having trouble finding anything bullish.”  Moreno adds, “In my opinion , hog (futures) will continue to move lower.”

The trend for hog futures is clearly down, but may be at a crossroads.  I wouldn’t be surprised to see a correction in hog futures even higher.

With the speculation that demand from expensive beef will shift to less expensive pork, hog futures catapulted to $82CWT after meeting last September’s low of $78.50.  This spike in hog futures is the highest in eight weeks and may be a reversal-day for pork prices.

USDA data indicates packing plants slaughtering 1.6% more hogs than this time last year.  At the same time, the disparity of pork prices versus beef prices is about $1.17, but maybe not for long.  A major food company is predicting pork prices to rise this year due to an anticipated reduced beef supply.

“With beef prices rising slight, hogs look relatively cheap. Heading into the spring and summer grilling season this should benefit pork prices,” said Kevin Craney, a senior commodities broker for RJO Futures in Chicago, regarding the current hog futures situation.

Hog futures trend is still clearly down, but today’s reversal in pork prices should be considered a pull-back opportunity to look for short positions once again.  Tomorrow’s USDA Crop Report should affect hog futures as well.

Cattle futures appear to be lifted by attractive beef prices and perceptions of increasing demand for domestic beef.  Cattle futures have risen $2.50 from lows just last week.

The USDA has reported in the past 12 months, beef prices dropping over 7% (as well as pork prices declining, but chicken “rising”).  Just yesterday, a Midwest commodities analyst observed “wholesale” beef prices up almost ½% at a two week high, ultimately signaling more beef demand.

Cattle futures trend have been down for two months now.  We have been trading feeder cattle futures as an alternative to live cattle futures lately because feeders seem to trend better than live.  I’m awaiting a significant bounce higher, or a lower-risk alternative, to get short cattle futures again.