I’m expecting additional weakness in the pork carcass value into next week.?

 I’m expecting additional weakness in the pork carcass value into next week.

LEAN HOGS

Lean hog futures closed higher across the board on Wed with no feature to the spreads. Generally, the cash hog market continues to hold up well. The cash was lower yesterday but only lost part of the gains posted Tuesday. Also, futures are still holding on to their uptrend despite the massive outside day lower close posted on Tuesday. A real lack of follow through selling was evident in the Wed trading action. Today the cash hog market is looking steady to perhaps lower. Packers are booked into next week. The cutout was quoted down .60 yesterday with a soft tone noted in the hams and loin cuts. I’m expecting additional pork carcass weakness into next week. I don’t have many trading ideas at this time. We’re spec short Dec futures with a break even buy stop in place. I expect stiff resistance in the Dec contract in the range from 5410 to 5460. A few of my producers who are not short hedged futures are purchasing a few of the Dec 47 puts. It’s my opinion that a close below 5200 would send the market lower for a test of the uptrend. We’ll see if it happens.

LIVE CATTLE

Live cattle futures enjoyed general strength yesterday led by the expiring Oct live cattle contract. Indeed, the cash news has been positive for the second consecutive week. Beef packers came out of the gate this week; buying cattle on a Tuesday and paying higher money to get them. This occurred on the heels of the higher trade for show list cattle last Friday. Having said that, I’m a bit disappointed by the volume totals reported yesterday. Most of the cattle have been moved in NE, partially moved in KS with very few cattle moved in TX. The wholesale beef was higher for seven out of eight days until setting back yesterday. It’s my opinion that beef demand is simply not going to be strong enough to drive prices higher to sharply higher than current levels. My producer/hedger clients have been establishing hedges over the last week. Look for a two sided trade today. There were 60 new deliveries posted against the Oct contract with a stopper evidently taking them.