MORNING LIVESTOCK REPORT Tuesday June 30, 2009
LEAN HOGS
This will be a brief comment today as I have a grain report to digest. Lean hog futures appear to be etching out a bottom. The strength in the bull hog spreads is supportive of this notion. Most contracts recovered off fresh contract lows on Monday with July, Aug and Oct actually higher. I'm hearing that packers are looking for hogs this week which is a vast departure from recent activity. Also, it's unusual for packers to be looking for hogs in a short kill week. Last week's kill was down 5.5% from last year and given a light production schedule for this week, perhaps the pork pipeline will finally get cleaned up. I'm speculating that it will as we're holding bull hog spreads for my spec traders. I'm looking for upside follow through in lean hog futures in today's action.
LIVE CATTLE
Wow!! Live cattle futures exploded to the upside yesterday as funds appeared to aggressively cover short positions. The volume of trade was very active at over 60,000 contracts traded with a record high volume on the electronic exchange. Total open interest was down by 3,109 contracts with lower OI noted in the June and August while OI was higher in all other live cattle contracts. Feeders, which also penetrated key resistance levels saw higher OI in every contract. The live cattle market is in the process of "waking up" from the six month sideways trade. Oct futures posted their highest settlement since January 8th. It appears that live cattle futures traders are now ready to focus on historically tight fed supplies with the theory that the U.S. and global economy is bottoming out. I'm trading from the long side with my spec traders. However, we became active in hedging summer production yesterday through the Aug options market. Call me for a discussion of specific details regarding my hedging program. Look for upside follow through in today's action.
If you're not satisfied with your current brokerage relationship give me a call or send me an email at dennis.smith@archerfinancials.com or 1.877.377.7905.
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