Written Commentary
Live Cattle
Volume on live cattle, feeder cattle and lean hogs is drying up. Spec spreading makes up the majority of trading. Cash cattle prices are posted but are taken with a grain of salt. Often when volume dries up, it isn’t long before there is a big move and often a reversal as algorithms take advantage of the small traders in the market. Fundamental traders are waiting to see how the cattle that have been backed up will eventually be priced. Just because they have been delayed going to slaughter doesn’t mean they don’t have a value. At some point, there will be an established cash price. With bigger slaughter, and overweight cattle the outlook for cash cattle prices is lower.
Consumers buying ground products over full cuts. The 40 million that are unemployed aren’t buying prime rib roasts or steaks. Restaurants that have re-opened are struggling. Select primals cuts are being ground from primal rib sections to primal flanks.
Hedgers should take advantage of rally. Large disappearance on Friday’s COF report saw cattle moved out of feedlots, but they will eventually come back to be put on feed. Also placements were down because feeders have been held from market. Feeders didn’t vanish.
Lean Hogs
Pork carcass Friday down 1.26 with big ups and downs on primal cuts. Loins up 18.99, hams down 17.77, butts down 22.94, picnics up 3.62 and ribs up 4.79. Bellies were up .34. Big movement over 500 loads. Slaughter is increasing and this week packers are taking advantage of Saturday killing 302,000 hogs.
Pork in China prices continued to fall last week, with supply exceeding demand, showed official data, reports “Xinhua” agency. 18 to May 22, the average price index of pork in 16 provincial-level regions monitored by the Ministry of Agriculture and Rural Affairs stood at 36.04 yuan (US $ 5) per kilo, a decline of 0.8 % in weekly terms.
The drop in prices came after the government adopted multifaceted measures to increase supply, including the release of frozen pork reserves and the expansion of imports.
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