By Dennis Smith | Grain PhD Ag Risk Specialist
Cash is called lower again today after another bloodletting yesterday. Cutout was stable so improved packer processing margins is coming right out of the producers pockets. The latest CME lean hog index stands at 5828 with Aug futures going off the board today at noon. Futures displayed another sharp rally yesterday which is a selling opportunity. The weekly kill is going to swell rather dramatically which is necessary to get hogs cleaned up. This week’s kill is projected at 2.449 million, or up 4.7% compared to last year. Short covering was the feature in futures yesterday with open interest dropping by 800 cars. Volume on the rally was not heavy at 52,000. Once again, recommend working orders to sell futures on a nice rally.
The USDA reported that 600 head traded yesterday in IA at $173 in the meat. The trade is really down in the mouth and forecasting another round of lower cash steer trade this week. The trade is leaning way too bearish in my opinion. Dec LC are in our buy zone. We plan to give the bull spread a couple more sessions to reach our target of even money. The show list is just slightly larger on the heels of negotiated trade of 104,000 last week. The north appears fully committed to keeping current with NE moving 50,000 last week. In the prior week it was IA that moved the majority of animals. The weekly cattle slaughter is projected to be 644,200 or about the exact same size as last week’s harvest. The beef was sharply higher yesterday.
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