By Dennis Smith
Live cattle futures staged another phantom rally yesterday which is the fourth or fifth time this has occurred in live cattle in recent activity. The Aug contract went from support to resistance in about 5 minutes. It would appear that the fundamentals have nothing to do with these wild, short term moves. There was no cash steer trade yesterday and the beef continued to grind lower. We're holding short positions and long puts until/unless the Aug closes above resistance which I'll define at 12300. The USDA will issue a monthly cattle-on-feed report today at 2:00. The trade is expecting placements and marketing of cattle during June to be down 5% from last year.
Cash hog prices were mixed to lower yesterday with prices out west actually up .50 while cash hog prices in the eastern belt were down 2.00. Cash bids for today are expected to be lower. In addition, I'm expecting lower to sharply lower cash prices next week as the weather improves dramatically for moving hogs. Margins have been lost as the product is being discounted daily to move through the pipeline. Compounding the problem is the
fact that production is edging higher, average weights remain above last year and the USDA will issue a monthly cold storage report Monday that will likely show record large amounts of pork in storage. Support in the Aug hogs is well defined at the 40-day moving average which comes in today at 9580. The deferred hog contracts are going to be attracting selling interest if corn prices continue to work lower.
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