Market News

Margin poor hog packers cut back on production

Strong gains were posted in live cattle contracts on the Chicago Mercantile Exchange on Monday. The main feature was fund buying. Buy stops were tripped in August and October after they broke their 10 day moving average resistance barriers. Some early week strength in outside markets appeared to have a role in the early week buying according to DTN. August settled 130 points higher at 84.77, and October was up 160 at 90.25. Boxed beef cutout values were steady to weak on light to moderate demand and moderate to heavy offerings. Choice boxed beef was up .20 at 137.56, and select was down .91 at 131.44.

Feeder cattle ended 50 to 107 points higher partly on support from the live pit. The rebound in the stock market also helped to drive additional buyer activity into the market. There was also some spreading out of the back months into August. The August feeders ended 87 points higher at 103.80, and September was up 100 at 104.22.

Feeder cattle receipts at the Oklahoma National Stockyards on Monday totaled 11,800 head. Compared to last week, feeder steers and heifers were 1.00 to 2.00 higher with very good demand. Steer and heifer calves were lightly tested and 2.00 to 3.00 lower. Feeder steer calves medium and large 1 weighing 500 to 600 pounds at 100.00 to 109.00, 600 to 700 lb yearling steers 102.50 to 108.75. Heifer calves weighing 500 to 600 pounds at 94.50 to 101.75, and 6 to 7 weight yearlings from 95.00 to 101.50.

Monday’s cattle slaughter was estimated at 125,000 head, 4,000 more than last week, but 2,000 less than last year.  Packer inquiry into the feedlot cattle was typically light with significant trade volume not likely until the second half of the week. New show lists are larger in the South and near unchanged in the North, Early asking prices are around 84 to 85 in the South and 134 + in the north.

Hog slaughter was estimated at 360,000 head, 10,000 less than last week and 63,000 head under a year ago. Barrows and gilts at the terminals were steady on a live basis at 33 to 41. Missouri direct hogs closed at 53.00 to 54, steady with Friday. Iowa/Minnesota hogs closed .90 lower at 56.38, the West was down 1.15 at 56.27, and the East was .53 lower at 54.59. Three hog plants were dark on Monday as margin poor packers cut back on production. Last week’s kill was the smallest since August of 2007, down 9.7 percent from last year at this time. Tuesday’s cash bids are projected to be weaker.

Lean hogs settled mixed, but mostly lower. The overall general tone of the market was weaker as evidenced by additional pressure in spring 2010 contracts. July contracts were in more of a liquidation phase as the contract goes of the board later this week. July hogs settled at 59.50 down 65 points, and August was down 60 at 63.00. Pork trading was slow, with light to moderate demand and mostly light offerings. The pork carcass cutout was up 1.17 at 59.35.

Pork bellies s settled mixed with the front months showing gains. The price spread between 2009 and 2010 contracts remains over $20 which gives additional hope that more upward potential may enter the market long term.  July was up 65 points at 62.50, and August was up 40 at 63.20.