Written Commentary
CATTLE FUTURES
The technical action yesterday was impressive given the bearish export sales news, weakness in the beef market and a sluggish cash market. The USDA boxed beef cutout was down 64 cents at mid-session yesterday and closed $1.13 lower at $252.34. This was down from $258.01 the previous week and was the lowest the cutout had been since April 1, Cash live cattle traded in active volume on Thursday at prices close to last week. There were 11,801 head reported across the five regions with an average price of 142.34 versus a weighted average of 142.30 last week. October closed at 145.62 and December at 151.32 so the premium is significant. December cattle closed sharply higher on the session yesterday and the buying pushed the market up to the highest level since August 17. Weakness in the beef market and a sluggish tone for demand and the cash market helped to drive the market lower Wednesday, but strength in the hog market and ideas that supply will tighten up into the fourth quarter helped to support.
HOG FUTURES
December hogs closed sharply higher on the session yesterday and the buying pushed the market up to the highest level since August 17. With the cash market at 97.58, it is difficult to find new aggressive selling interest with December hogs trading near 86.00 on the open yesterday. Outside market forces shifted to a more negative tilt, but this did not slow the buying. The jump and pork values this week was a bullish surprise as traders are expecting a sharp break in the cash market. In addition, export sales came in well above trade expectations. The CME Lean Hog Index as of September 13 was 97.58, down from 97.67 the previous session and 101.48 the previous week. The USDA pork cutout, released after the close yesterday, came in at $104.02, down $1.00 from Wednesday but up from $101.15 the previous week. The USDA estimated hog slaughter came in at 482,000 head yesterday. This brings the total for the week so far to 1.917 million head, up from 1.446 million last week and 1.889 million a year ago. US pork export sales for the week ending September 8 came in at 25,067 tonnes.
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