Written Commentary
MORNING LIVESTOCK FUTURES OUTLOOK
LEAN HOGS
After setting a new contract low yesterday morning, August hogs reversed higher in dramatic fashion and closed strong on very large trading volume. The significant increase in daily trading volume over the last 2 days is important and raises the likelihood the market is making a low. Key resistance for August now stands at Wednesday’s gap at 87.87 – 88.30. Unfortunately for the bull camp, December hog prices closed only marginally higher yesterday and did not have the dramatic reversal seen in the August contract. More technical confirmation will be needed in December to call for a low. The CME Lean Hog Index as of July 9 was 88.67 up from 88.43 the previous session but down from 89.31 the previous week. The USDA estimated hog slaughter came in at 475,000 head yesterday. This brings the total for the week so far to 1.890 million head, up from 1.429 million last week at this time and up from 1.855 million a year ago. The USDA pork cutout, released after the close yesterday, came in at $95.87, up $2.60 from Wednesday and up from $92.39 the previous week. The previous low was $93.27 on July 10. The previous high was $97.35 on June 28.
China’s national average spot pig price as of July 12 was up 1.62% from the previous day. For the week prices are up 2.50%, up 6.68% for the month and up 31.08% year to date and up 34.93% versus a year ago. Dalian live hog futures as of July 12 were up 0.5% from the previous day. For the week prices are unchanged and up 1.19% for the month and up 5.63% year to date.
LIVE CATTLE
August live cattle ended unchanged yesterday in an uneventful session and boxed beef values were weak. August futures support at this week’s low of 180.82 remains a key technical pivot point. Cash cattle trade yesterday in the north was $195-198.50 and some light trade in Kansas was seen between $188-191. The 5-area, 5-day weighted average for the week now stands at 194.98, compared to 195.65 at the end of last week. South Korea and China were the biggest buyers of US beef last week. China’s June meat imports for the 1st 6 months of the year were 3.3 million tonnes, down 13.4% year to date. The USDA estimated cattle slaughter came in at 122,000 head yesterday. This brings the total for the week so far to 476,000 head, up from 359,000 last week at this time but down from 504,418 a year ago. The USDA boxed beef cutout was down 38 cents at mid-session yesterday and closed $2.40 lower at $321.65. This was down from $329.84 the previous week.
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