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

CATTLE—Apr live cattle prices ascended to a 17-1/2 month high. Bullish factors include (1) flooded feedlots that have induced lower cattle weights, and (2) the Jan 29 cattle inventory report that showed the US cattle herd as of Jan 1 at 93.7 mln head, a 51-yr low. Bearish factors include (1) demand concerns after US Feb consumer confidence fell to a 10-month low, and (2) low feed costs that may prompt an increase in cattle herds. Large specs as of Mar 9 continue to support the rally as they added to a record large long position of 92,074. The Cattle on Feed report (Feb 19) was neutral as cattle on feed Feb 1 were 98% of the year-earlier level, while cattle placed on feed in Jan rose to 99% of the year-earlier level vs Dec’s 93%. The Jan Cold Storage report (Feb 22) was bullish with beef supplies in cold storage falling -6.2% y/y vs -7.0% y/y in Dec.

HOGS—Apr lean hog prices corrected down to a 3-week low from their recent 1-1/2 yr nearest-futures high. Bearish factors include (1) slack foreign demand with Jan US pork exports down -2.5% y/y, and (2) concern that the recent rise in prices to a 1-1/2 yr high will erode retail demand. Bullish factors include (1) a resumption of US pork exports to Russia, and (2) the cut by US hog producers in their breeding herds to a 33-yr low of 5.85 mln sows. Large specs as of Mar 9 increased their large long position to a record 34,193. The Jan Cold Storage report (Feb 22) was bullish with supplies in cold storage falling -18.3% y/y vs -22.4% y/y in Dec. The quarterly Hogs & Pigs report (Dec 30) was bullish with a -2.0% y/y decline in the US hog inventory to 65.8 million hogs and a -3.5% y/y drop in the US hog-breeding herd as of Dec 1.

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