By Dennis Smith

LIVE CATTLE

It appears that several bullish items are falling into place in the live cattle market. First, all 50 delivery notices posted from FND were retendered but they were also all demanded at the $1.00 discount. There were 60 new deliveries and I suspect all of these will be retendered and perhaps they will all be demanded. This is generally a bullish indication. Second, June beef exports were up 8% compared to June of 2012. This is really impressive news and tends to confirm that our export customers do not consider U.S. beef expensive. Beef exports during the first half of 2013 are down 1%, again, generally much better than expected and certainly much better than pork exports during the same period. Third, the wholesale beef, yesterday, showed unexpected signs of life. The beef was sloppy at noon yesterday but finished the day with a firm tone and with the choice out-performing the select. It's my belief that much cooler than normal temperatures during Aug will contribute to better beef consumption than normal at the end of the summer. And finally, we noticed a sharp decline in OI in Dec live cattle puts from yesterday's trade. It would appear that some large traders have concluded that summer lows in futures are likely in place. I agree.

LEAN HOGS

Good morning. June pork exports were up 2.4% compared to June of 2012. I've not had a chance to study the data carefully yet but exports to Mexico were up 20%, mostly ham business, exports to Japan were up 4% and trade with China/Hong Kong was up 15%. Trade with Russia remains a goose egg. Pork exports during the first half of 2013 are down 7%. Current butcher hog supplies are tight and packers are expected to bid higher for animals for delivery next week. Cash finished strong yesterday along with higher cutout values. I'm expecting the Aug hogs to push their way up to major resistance at 10200 to 10250. The August hogs go off the board one week from today. The latest index stands at 100.71. If/when the August trades up to 10200, we'll harvest some more of our 100 calls which we accumulated in numbers at 15 to 25 points. Starting today I want to begin working orders to sell the Oct hogs at 8730. This would be appropriate for spec as well as hedge traders. I'll risk about 100 points on the position if filled.

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