Meats Outlook - An Excerpt from CRB'S Futures Market Service

CATTLE—Dec live cattle prices receded from their recent 2-month high. Bearish factors include (1) the +0.6% rise in the overall US feedlot herd as of Oct 1 from a year earlier, the first increase in 19 months as cheaper feed prices prompt expansion of herds, and (2) weak foreign beef demand after US Aug beef exports fell -24% y/y. Bullish factors include (1) speculation that a global economic recovery will improve beef demand, and (2) speculation that the weak dollar will boost prospects for US beef exports. Large specs as of Oct 20 reversed to a now small long position of 5,438. The Cattle on Feed report (Oct 16) was bearish as cattle on feed Oct 1 rose to 102% of the year-earlier level, while cattle placed on feed in Sep rose to 106% of the year-earlier level vs Aug’s 104%. The Sep Cold Storage report (Oct 22) was bullish with beef supplies in coldstorage falling -4.5% y/y vs -4.8% y/y in Aug.

HOGS—Dec lean hog prices corrected up to a 3-month high from the Aug 6-1/2 yr low. Bullish factors include (1) China saying it will lift its US pork import ban “very soon,” and (2) the reduction in US hog breeding herds by US hog producers to 5.874 mln sows, the lowest since 1973. Bearish factors include (1) weak foreign demand (US pork exports from Jan-Aug down -19% y/y) and (2) the surge in US pork  production in Sep to 2.0 bln lbs, a record for the month. Large specs as of Oct 20 held a moderate short  position of 10,766. The Sep Cold Storage report (Oct 22) was bearish with supplies in cold storage rising +1.1% y/y vs +5.5% y/y in Aug. The quarterly Hogs & Pigs report (Sep 25) was bullish with a -2.3% y/y decline in the US hog inventory to 66.6 million hogs as of Sep 1.

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