Volume on Cattle And Hogs is Drying up
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.
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.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
Futures and options trading involve significant risk of loss and may not be suitable for everyone. Therefore, carefully consider whether such trading is suitable for you in light of your financial condition. The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM. The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared. The information provided is designed to assist in your analysis and evaluation of the futures and options markets. However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.