Written Commentary
MORNING LIVESTOCK FUTURES OUTLOOK
CATTLE COMPLEX
There were changes on spreads Thursday. The June cattle/June lean hog spread and the August live cattle August lean hog spreads had key reversals on daily charts. They gapped open higher and closed below the previous day’s low.
Brazil’s growth in cattle is shifting to feedlots versus pasture raised cattle. Land that has been used to graze cattle is being converted to crops. The land is going to corn both for feed for cattle and hogs, to have more for exports and they are increasing corn ethanol production with increasing DDGs.
LEAN HOG COMPLEX
The CME Pork Cutout narrowed to 7.23 over the CME Lean Hog Index putting packer margins in the red. Watch to see if packers slow slaughter if cutout prices continue to lose to the hog index.
Exports were up last week. Exports are expected to gain over 3% this year and with slaughter increasing, it is exactly what is needed.
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