By Dennis Smith
The cattle-on-feed report contained few surprises in regards to placement activity and the marketing of cattle during June. The report did confirm that the industry continues to place large numbers of heavy weight cattle. June placements of 800 pound calves were up 26% compared to last year. Placements of 800 pound calves during the March-June period have been up 17.5% from the same period last year. This will make beef production larger this fall than generally expected by the numbers. This is one reason why I'm still expecting pressure in the cash steer market and another sell off in futures. Cash trade last week occurred at $1.19 in KS with some trade in NE as high as $1.20. steady/firm with the trade of the last two weeks. Generally, I'm expecting the wholesale beef to work still lower, searching for a price level that triggers domestic beef demand. Support in the Aug fats comes in at 12100 with resistance at 12300.
Good morning. Cash hog prices on Friday were flat to down 1.50. I'm expecting a weak to lower tone in the cash hog market to start out this week. Weather conditions for moving hogs are vastly improved this week and it appears the cool temps will stick around for next week as well. In the meantime, I'm hearing that product will continue to be discounted. The pork carcass, last week, declined by $2.54. Lean hog futures are trading discount to cash, predicting everything that I've described above. I'm expecting pressure in the form of long liquidation as the pork fundamentals continue to erode. The USDA will issue a monthly cold storage report this afternoon which is expected to confirm record large frozen pork stocks in the nation's freezers. The bullish traders are willing to buy the discount and they also have the favorable chart pattern in their favor. I need to see a close below 9580 which will take the bullish chart pattern away from the bullish trader....we'll see.
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