ADM Investor Services


Good morning! Cash hog prices looked to be mixed to lower today. It's very possible that cash hog prices have topped. The cash market was a mixed affair yesterday with prices higher in the west and lower in the east.
Recall, however, that cash was cracked really hard Friday out west. The recovery yesterday in the western hog belt was not very impressive. The product, on the other hand, remains in good shape with no indications of a top in the pork carcass. This should keep the discounted July and Aug hogs supported over the next couple of sessions. Packers are cutting back the kills and soon Fourth of July business will be complete. Eventually this market will top. I hope to use a rally during mid-week, in the Aug contract, to secure put options.


Similar to last week there was a very large fund buy stop elected yesterday in the Aug live cattle contract. This order took out all of the offers and like a bull in a china shop sent futures 150 higher in about 30 seconds. We spent the rest of the day pulling back off the highs. Look for bids to surface this week at $1.18 which compares to cash trade last week at $1.20. The show list is larger this week compared to last week and last year.

In addition, look for the wholesale beef to stabilize and eventually work back downward below $200. The beef will need to work lower to uncover demand. Once the Fourth of July bookings are complete, more attractive beef prices will be necessary. Eventually look for major support at 11800 in the Aug live cattle to be aggressively tested. I remain long term bearish toward feeders and we've spend last week and yesterday purchasing Aug feeder cattle puts. In many years the live cattle can/will post a seasonal bottom at this time, but it simply does not feel right to me this year. I remain negative.

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