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

CATTLE—Dec live cattle prices are moving within a narrow 6-month 9-cent range. Bullish factors include (1) speculation that retailers were stocking up on beef ahead of the holiday season, and (2) optimism that the weak dollar will boost prospects for US beef exports. 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. Large specs as of Oct 27 added to a moderate long position of 16,278. 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 cold storage falling -4.5% y/y vs -4.8% y/y in Aug.

HOGS—Dec lean hog prices rallied to a 3-1/4 month high. Bullish factors include (1) the cut in pork import restrictions by China and Russia, which may benefit US pork exports, 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 27 cut their small short  position to 7,195. 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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