Tag Archives: Livestock

Cattle: Outside Markets Helping to Recover Yesterday’s Weakness

by on January 31, 2012

Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

It may take some help from the export market and increased interest from fund traders but cattle appears to have the supply fundamentals to continue to attract speculative interest for the coming season. The inventory report showed the smallest herd in 60 years. The feeder supply outside of feedlots came in down 4% from last year. Total cattle and calves as of January 1st came in at 90.769 million head, which was 97.9% of last year. The calf crop was 35.313 million head, 98.9% of last year. Traders see tightening supply into the spring as a potential bullish force. Short-term, however, it will be important to see the beef demand show some improvement. Boxed beef cutout values were down 92 cents at mid-session yesterday and closed $1.25 lower at $182.88. This was down from $183.52 the prior week and is the lowest beef market since January 20th. April cattle closed moderately lower on the session yesterday and stayed in a fairly tight range for the last several hours of trade after volatile trade early in the day. The market pushed sharply lower on the session early to push down to the lowest level since January 19th. The market managed a 50 point bounce off of the early lows into the mid-session as the selling slowed. Cash cattle traded $2.00 lower on the week last week to $124.00 and the cattle inventory report confirmed the lowest herd in 60 years, but this news was not a surprise to traders. The surge up in the US dollar and a sharp break in the stock market were seen as bearish forces for the early weakness. The estimated cattle slaughter came in at 114,000 head yesterday, which was right as expected but down from 123,000 last week and down from 121,000 a year ago as this time. Trend-following fund traders (non-commercial less index funds) were net long just 50,907 contracts as of January 24th, and this is down from 116,518 contracts in September of 2010. Index fund are net long near 117,000 contracts and have been net long as much as 156,752 contracts.

TODAY’S GUIDANCE: The more positive tilt to outside markets appears to be helping cattle quickly recover from yesterday’s weakness. However, beef prices are still struggling to move to a higher level and feedlot operating margins are deep in the red. The short-term cash fundamentals look a bit sloppy while the longer-term outlook is for sharply higher prices into the spring.

TODAY’S MARKET IDEAS: With the short-term overbought condition, traders might consider buying 2-3 calls and selling 1 futures for the April or June contracts. On a 150 point break, lift the futures and hold the calls for a spring rally. April cattle may show some technical support near 127.75 and a move through resistance at 128.72 would suggest a swing up to 130.62.

Hogs: Downside Looks Limited Against April

by on January 31, 2012

Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

A recovery in loin prices late yesterday and ideas that supply will tighten ahead helped to support the strong action overnight. In addition, traders believe that livestock markets are likely to attract increased interest from fund traders this year as a weaker dollar and a firm global demand for protein remain a positive force. In addition, pork exports hit a record high in November (total and to China) and China buyers are back from holiday this week. Trend-following fund traders (non-commercial less index funds) were net long just 13,296 contracts as of January 24th and this is down from 57,697 contracts in late October. Index fund are net long near 85,000 contracts and have been net long as much as 127,379 contracts. April hogs closed slightly lower on the session yesterday but well up from the early lows, which came in right on the day session opening. The market pushed moderately lower on the session in early trade but held support above Friday’s lows. February hogs also pushed lower early yesterday but held above last week’s lows. Cash hogs traded mostly $1.00 lower as packers appear to be cutting back on the slaughter pace for hope of improving margins. However, the cut-back is a short-term negative demand force as packers are able to buy all the hogs they needed at lower prices due to the reduced slaughter pace. Packer margins are deep in the red after persistent weakness in pork product last week and a bounce in cash hog values. Loin prices were down to $91.41 late last week from $98.71 one week previous. The CME Lean Hog Index as of January 26th came in at 87.35, up 59 cents from the previous session and up from 85.27 the week before. The estimated hog slaughter came in at 406,000 head yesterday, which was below trade expectations. This was down from 427,000 last week but up from 381,000 a year ago as this time. Pork cutout values, released after the close yesterday, came in at $83.91, up 65 cents from Friday but down from $85.27 the previous week.

TODAY’S GUIDANCE: Perhaps pork product prices might show some recovery this week when China buyers are back from holiday. Loins jumped late yesterday to help spark a recovery. The downside looks limited for April futures and we would not rule out an export/fund led rally into the spring.

TODAY’S MARKET IDEAS: April hog support is at 87.25 and 86.90, with 88.10 and 89.37 as resistance. Watch for choppy to higher trade with 90.42 as objective.

Hogs: Premium Structure Concern for Bulls; Short-Term Overbought Too

by on October 5, 2011

Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

The pork market seems to be stabilizing at a higher level but the market continues to see increasing supply into November as a factor that could spark a weaker trend in the cash market into November. The real question is whether there will be an active export market for US pork to help absorb some of the excess. October hogs are trying to hold on to a hefty premium to the cash market so it will be important to see steady to higher pork cut-out in the days just ahead to justify a further advance. December hogs closed just 5 points higher on session yesterday, which was down 85 points from the mid-session peak. Hog futures saw a bounce after choppy to lower trade early led by the December futures. Traders see the corn market sell-off as a factor which might spark some expansion in the industry and this sparked some selling in the late 2012 contracts but buying upfront. As producers hold back gilts, the short-term supply of hogs available for market could tighten some. Cash markets were steady to $1.00 higher, which helped to provide some support. In addition, a bounce in pork values late Monday added to the positive tone. Weakness in economic sensitive commodity markets and a sell-off in cattle helped contribute to the late selling. Like cattle, the hog market saw active buyers overnight and higher prices with “less” macro economic fears. The CME Lean Hog Index as of September 30th came in at 91.30, up 22 cents from the previous session and up from 90.92 the week before. The estimated hog slaughter came in at 421,000 head yesterday. This brings the total for the week so far to 851,000 head, down from 853,000 last week at this time but up from 839,000 a year ago. Pork cutout values, released after the close yesterday, came in at $98.31, down 1 cent from Monday but up from $97.41 the previous week.

TODAY’S GUIDANCE: The market seems a bit too overbought and the premium a bit too high to attract increased speculative buying in this environment unless there is a steady flow of positive news from the pork cut-out, which would be a sign of active export demand. The premium structure is a concern for the bulls and the market is in a short-term overbought condition. New buyers might wait for a more significant pull back.

TODAY’S MARKET IDEAS: December hog support comes in at 86.85 and 85.65, with 89.50 as the next target. New buyers might wait for set-back.

Cattle: Strong Cash; Packers Will be Pushing Beef Up This Week

by on October 5, 2011

Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

The market is seeing some increased volatility as futures absorbed a long liquidation sell-off yesterday only to recover a good portion of the break overnight. Perhaps the steady trade in the cash market was seen as a positive to some traders and a negative to others. In order to see further gains, however, the market will need to see consumer demand remain steady on an uptrending beef market. This may be difficult with lower poultry prices, but poultry supply is also on the decline. The market finally succumbed to outside market forces yesterday with a sharp break. April cattle closed more than 200 lower and back down near $121 as cash cattle in Texas traded at 121.00 this week, which was steady/firm against expectations but may have been disappointing against expectations. The market traded mostly lower on the session early with talk of the overbought condition of the market after the surge last week and follow-through up Monday helped to pressure. The sharp break in the stock market helped to pressure but the strong close in the stock market yesterday plus a little less fear of Euro debt problems helped to support solid gains in overnight action, with October cattle already up as high as 122.40 in overnight action. Traders indicated that much of the selling yesterday was profit-taking after the run to an all-time high for nearby futures. The estimated cattle slaughter came in at 131,000 head yesterday. This brings the total for the week so far to 260,000 head, up from 259,000 last week at this time and up from 256,000 a year ago. Boxed beef cutout values were up 31 cents at mid-session yesterday and closed 7 cents lower at $183.74. This was up from $183.05 the prior week.

TODAY’S GUIDANCE: Just when it looked like the cattle market had divorced itself from the global economic fears, the sharp break yesterday could cause some of the bulls to reconsider the short-term demand for the market for beef. The supply situation is tight now and hefty placements of cattle for the summer should help ease some of the tightness into the early 2012. Meanwhile, the market still sees the possibility of extreme tightness in supply of available cattle to move onto feedlots next year and also further tightening of supply “if” producers begin to hold back females.

TODAY’S MARKET IDEAS: December cattle short-term support is at 121.65 and 120.42, with next key resistance at 125.57. A continuation of the uptrend leaves 129.47 as a possible longer-term target. Cash is strong and packers will be pushing beef prices up this week. Position traders might consider buying June on a set-back.

Hogs: Odd for October To Take Big Premium to Cash This Time of Year

by on September 15, 2011

Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

Rumors of China buying more US pork has helped to drive the market sharply higher in the past week and some strength in pork product prices this week is helping to support active buying from speculators. Funds were noted buyers again yesterday and October pushed to the highest level since August 16th overnight. Pork cutout values, released after the close yesterday, came in at $95.72, up 88 cents from Tuesday and up from $94.96 the previous week which is the highest pork value since August 31st. Loins have recovered to $113.80 from $109.60 on Monday. With strong margins and what looks to be better short-term demand (maybe export), the cash market has traded steady to higher this week in spite of the hefty near-term supply. October hogs closed sharply higher on the session yesterday, and the market has now recovered more than 50% of the losses for the August 2nd to September 6th break. The market pushed higher again led by the October contract as firming cash and product prices leave a positive tilt to the pork market. Cash hogs traded steady to higher, and this added to the positive tone but the steep jump in hog weights has raised some concerns that a few hogs may be backing up in the country. Weekly average weights for Iowa/Minnesota for the week ending September 10th came in at 267.2 pounds, up 3.7 pounds from the previous week but still down from 268.1 pounds last year. Fund buyers were active, and this helped to drive the market sharply higher and strength in cattle added to the positive tone. The CME Lean Hog Index as of September 12th came in at 86.10, down 33 from the previous session and down from 90.86 the week before. This leaves October at a stiff premium to the cash market and October normally trades at a $2.00-$3.00 discount at this time of the year. The estimated hog slaughter came in at 425,000 head yesterday. This brings the total for the week so far to 1.274 million head, up from 851,000 last week at this time and up from 1.238 million a year ago. China pork prices hit a record high for the 5th week in a row and as a key driver for inflation; this has implications for China import activity for corn and/or pork. If China increases import activity in the months just ahead, this could ease supply concerns and support the US market during a seasonally weak time frame.

TODAY’S GUIDANCE: It is odd for October to take a big premium to the cash market at this time of the year, and this might limit the advance. December hog short-term support is at 84.42 and 83.37, with 85.62 and maybe 86.85 as next key resistance.

TODAY’S MARKET IDEAS: February hog buying support moves up to 88.32 and another close over 89.10 would leave 90.42 and 94.22 as next upside objectives.

Cattle: Funds Active Buyers; Could be an Upside Break-Out

by on September 15, 2011

Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

Funds have turned active buyers and the market acts like there could be an upside break-out and a move to another price level. Beef production seasonally declines into the end of the year and open interest is building. These are positive forces. October cattle surged higher late in the session yesterday to close sharply higher on the day. The trade has more and more confidence that tightening supply will support cash trade above 120 into October, and this pushed the market to the highest level since July 13th. The market traded moderately higher on the session early but the upside was limited by some weakness emerging in outside market forces. However, the afternoon push sharply higher in the stock market helped support the late buying. Cash cattle offers slipped by $1.00 to $119.00 but there are still no bids on the week after cash traded $117-$118 last week. Weakness in the stock market and a bounce in the US dollar helped to ease the buying support. The surge in beef prices this week has helped to give speculators more confidence in the long side and open interest is pushing higher on the week and has reached the highest level since July 15th. Traders are waiting to see if there is good volume with the higher beef trade to instill further confidence in the recent uptrend. The estimated cattle slaughter came in at 131,000 head yesterday. This brings the total for the week so far to 394,000 head, up from 260,000 last week at this time and up from 389,000 a year ago. Boxed beef cutout values were up 30 cents at mid-session yesterday and closed 40 cents higher at $184.57. This was up from $180.38 the prior week and is the highest beef market since August 29th.

TODAY’S GUIDANCE: A move over the July high at 121.80 would leave 124.97 as next technical objective for October cattle. The ability of packers to push up beef prices this week to restore margins opens the door for higher cash cattle trade ahead as long as there is not too much consumer resistance. The technical action is impressive.

TODAY’S MARKET IDEAS: Traders can look to buy April cattle on set-backs. Buying support for April cattle is at 126.17, with 128.40 and 130.62 as upside targets. The market is a bit too overbought to chase.

Hogs: It Is Difficult to Get Too Negative

by on August 26, 2011

Below is a sample of The Hightower Report’s Daily Commentary. To get this comment, and our daily coverage of 15 additional markets and trade ideas, visit futures-research.com for your free 2 week trial!

The collapse in pork cut-out values is helping to drive cash markets down quickly and the outlook for increasing supply ahead is helping to cast a negative tone on futures. The discounts may help to provide some underlying support but traders see the relatively high price as a significant obstacle to absorb the rising supply. The lack of excessive heat has allowed weights to recover quickly and trade supply psychology is negative. Monthly exports are reported about six weeks after the fact so it will be several more weeks before knowing July exports. China rumors of more aggressive imports began in July. October hogs closed slightly higher on the session yesterday with quiet trade. December and February hogs were moderately higher as the negative cash news was less of an influence. Talk of a short-term oversold condition of the market and ideas that cash bellies might stabilize soon helped to support. Cash hogs traded steady to $1.00 lower yesterday but the discount of futures to cash helped to support. Cash is called $1.00 lower for today and the steep drop in pork might cause packers to pull back even further. The sharp set-back in pork product prices late Wednesday helped to limit the advance. Pork cutout values, released after the close yesterday, came in at $102.11, down $1.93 from Wednesday and down from $106.93 the previous week. This is the lowest it has been since July 26th, when it was $101.31. Loins were higher but ribs and especially bellies were sharply lower. Bellies were down $7.21 to $119.43 as compared with $147.74 earlier last week. The CME Lean Hog Index as of August 23rd came in at 102.14, down $1.03 from the previous session and down from 106.49 the week before. The estimated hog slaughter came in at 413,000 head yesterday. This brings the total for the week so far to 1.662 million head, up from 1.650 million last week at this time and up from 1.642 million a year ago.

TODAY’S GUIDANCE: The weakness in pork and the steep downtrend in cash have the longs nervous despite the stiff discount of futures to the cash. This could spark another round of long liquidation selling soon. Given the importance of pork to the China economy and inflation, we would not be surprised to see active buying by China on further weakness. In addition, lower pigs per litter this summer might show up as smaller than expected slaughter into the first quarter. Poultry production is also on the decline. As a result, it is difficult to get too negative.

TODAY’S MARKET IDEAS: The next good support for February hogs is at 85.07, but the charts still look negative and we can not rule out a continuation of the recent downtrend to 84.05. October hog support is 86.75 and then 84.95. Look for choppy to lower trade just ahead.

Commodity Outlook – 2011.08.19

by on August 22, 2011

Below is an excerpt from The Hightower Report’s most recent Newsletter. To receive access to this story, with trade strategies, and our daily coverage of 16 markets, visit futures-research.com for your free 2 week trial!

While Warren Buffett thinks the US economy is stronger than the Federal Reserve does and rail car loadings in the US have remained fairly strong, Washington continues to undermine rather than help the economy. Just as the GOP-controlled House showed no desire to forgo their current 5 week vacation, the President, when asked if he would call Congress back early, indicated that was last thing he wanted to see. Clearly any politician worth their salt makes sure their message includes concern for the economy and the need to create jobs, but apparently the people with jobs (primarily those in Washington) don’t seem to have a real sense of urgency.

In our opinion, a recent serious decline in a private consumer sentiment reading highlights the ongoing negative drag spilling out of Washington, and that in turn could increase the difficulty in turning the US economy around quickly. With the early start of the 2012 Presidential campaign by the major political parties last week, it is safe to assume that the Super Committee (when they get around to convening) will continue to face an extremely partisan environment. With US leadership unable to settle the ultra critical debt/spending debate, one might also expect any effort to put together tax reform or a stimulus package to be a very, long-drawn out affair. In the mean time, some members of the Fed have become so negative toward the economy that one of them recently suggested that the Fed will probably won’t have to raise interest rates until sometime in 2013. In other words, it could be years before any tightening is undertaken!

Equities and certain physical commodities showed the capacity to rebound last week, but the coming three weeks might see the stock market sending a definitive message to US leaders that something real has to be done to reduce the US debt load; otherwise investors could begin to flee US equities and the US Dollar.

While markets like cattle, pork, corn, gold, silver and platinum should be able to stand up to noted weakness in US equities, a sharp slide in the US Dollar could provide an added lift for commodities with positive or strong fundamentals. Given a combination of even more slowing evidence from the US economy and a resumption of political rancor in Washington, the dollar could easily make new lows for the year. Some analysts think that “business as usual in Washington” will prompt threats from US credit rating agencies and perhaps even some heat from China, Europe and or the IMF.

In the event that the global community is forced to exert pressure on the US to act, it could result in the dollar falling back toward the 2008 lows! In other words, one should not be surprised to see the Dollar react as if something worse than sub-prime is threatening the United States!

The ‘Risk Off’ Mentality Continues

by on August 19, 2011

Global equity markets continue to slide overnight. Concerns over the European banking industry persist. Fund held positions of long crude / short natural gas are rumored to be getting unwound. This may cause a short-covering bounce in natural gas. Corn and other agricultural markets continue to be pulled down by outside macro-economic influences as opposed to their bullish internal fundamentals.

Terry Roggensack on CNBC Discusses the Markets

by on August 18, 2011

Terry talks about the markets. Watch!

← Older posts