MORNING LIVESTOCK REPORT Monday May 12, 2008
LEAN HOGS
Good morning! Lean hog futures continued their rally on Friday with all contracts higher with the exception of the July. Spec traders continue to pour into long positions in the hogs with total OI record high at 252,792 contracts. The lofty prices just took out the April highs but then most contracts backed off the session highs into the close. Hog slaughter last week was up nearly 8% from last year. Friday's pork cutout was up .06 at 78.77. In my opinion it's asking a lot, likely too much for demand to drive hog futures higher from this point forward. First, it would have to be solely from a demand standpoint as it appears that record large supplies will not let up. Second, higher prices at this time would be fairly contra-seasonal in nature. I'm encouraging my hedgers to "stay hooked" and I'm recommending to my spec customers to take a shot at selling the summer hogs. My opening call is steady to higher; watch out if they happen to open lower.
LIVE CATTLE
The impressive surge in live cattle futures continued on Friday and perhaps will continue again today. The market is solid from both a technical and fundamental standpoint. I've been preaching the bullish aspects of this market for several months and the opinion is starting to pay off nicely. My Friday evening livestock wire listed my upside targets. Cash steers traded higher on Friday with 94 cents being paid on behalf of the beef packers in the Southern Plains. That's up from 92 paid two weeks ago. The beef continues to perform with the choice beef cutout up .86 at 156.04. Box movement was good at 205 boxes and 67 trim. The bullish performance of the beef continued in the face of aggressive slaughter reported at 698,000, up 4% from last year. The USDA will issue a cattle-on-feed report Friday afternoon. It's expected to be bullish. We're scheduled to begin actual shipments of beef to S. Korea this week. It appears the Korean retailers can't wait to feature U.S. beef. They're expecting business to boom. My opening call is steady to higher.
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