MORNING LIVESTOCK REPORT Monday June 17, 2013
Cash hog prices were sharply lower Friday out west, quoted from down 4.50 to down 5.50. Cash in the east was steady. Look for a mixed to higher cash tone today. Adjustments will be made to the sharply lower quotes in the western hog belt.
However, it is likely that cash hog prices are in the process of topping. Once Fourth of July bookings are complete, you'll likely see some pressure develop in the product. June hogs went off the board Friday in strong fashion, posting a settlement at 102.30. If the July and Aug are not trading firm to higher early today, I'd view this as a warning sign of an impending top. Look for major support in the July hog contract from 9600-9550. Given a rally this week, I'll be looking to purchase and hold Aug lean hog puts.
The cash steer trade occurred Friday at $1.20 in the S. Plains with hot beef trading in the North at $195. These prices were all lower compared to the previous week. The beef finished on a defensive note Friday with the choice cutout down 1.10. Both live cattle and feeder cattle futures sold off into Friday's close. I'm expecting additional selling pressure in both markets early this week with the fundamentals not providing much in the way of buyer support. Look for the prospect of another round of lower cash steer trade this week and look for additional pressure in the wholesale beef as Fourth of July business is wrapped up. We spent most of last week securing put options in the Aug feeders. Look for futures to work downward toward the index.
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