By Dennis Smith
Special Notice: I will be attending the Farm Progress Show on Thursday, Aug 29. I'll be there all day working at the ADM tent. If you're in attendance please stop by...the tent is air conditioned and I'll have "give-aways."
Cash hog prices were lower again on Tuesday with prices generally down .50 to 1.50. The cash outlook remains soft to lower for the rest of this week. Slaughter is edging higher faster than what I expected. Yesterday's kill at 431,000 was the largest daily kill since Jan. 15. The product is soft and look for cutout values to continue to work lower. I'm trying to purchase October hog puts today to re-enter this market from a spec standpoint. We added to some hedges yesterday by selling July hog futures above 9,000.
Live cattle futures pulled back yesterday in a very light volume trading affair. Total volume was under 25,000 with OI down 622. Don't ever sell a quiet market short. I'm bullish and trading from the long side and holding bullish option positions for my spec clients. Look for a steady to firm cash steer trade when it breaks loose later this week. The beef is working higher and quoted up .29 yesterday with the select beef up 1.50. The cattle-on-feed report was bullish and should underpin the market moving forward. Yes, I'm still bullish. Watch the December live cattle contract for a test and possible penetration of resistance at 13,070. A close over this level should create some "fireworks."
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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 views and opinions expressed in this letter are those of the author and do not reflect the views of ADM Investor Services, Inc. or its staff. 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.View All Blogs »