Meats Outlook - An Excerpt from CRB'S Futures Market Service
CATTLE—Feb live cattle prices recovered slightly from their recent 2-year low as the recent Cattle on Feed report showed shrinking supplies. Bearish factors include (1) the USDA’s cut in its 2009 US beef export forecast to +4% y/y from an earlier forecast of +12% y/y as the strong dollar and the credit crunch take a toll on exports, and (2) lower feed prices which may eventually boost herd sizes. Bullish factors include the credit crunch which has made financing herds more difficult and expensive and has undercut herd sizes. Large specs as of Nov 18 had a small short position of 3,741. The Cattle on Feed report (released Nov 21) was bullish as cattle on feed as of Nov 1 were at 93% of the year-earlier level, a 6-year low, while cattle placed on feed in Oct fell to 90% of the year-earlier level vs 93% in Sep. The Oct Cold Storage report (released Nov 21) was bullish with supplies of beef in cold storage -5.1% y/y vs -7.9% y/y in Sep.
HOGS—Feb lean hog prices are attempting to stabilize above their recent 11-3/4 month low. Bearish factors include (1) wholesale pork prices at a 7-month low (-41% since Aug), (2) the USDA’s recent cut in its 2009 US pork export forecast by 12% to 4.5 bln lbs, and (3) the drop in US pork exports in Sep by -9.9% m/m, the fourth straight monthly decline. Large specs as of Nov 18 cut their long position to a small 9,106. The Oct Cold Storage report (released Nov 21) was bearish with pork supplies +3.8% y/y vs +4.7% y/y in Sep. The quarterly Hogs & Pigs report released Sep 26 was bearish as it showed a total +2% y/y gain in all hogs and pigs to 68.7 million as of Sep 1, a record high for that date.
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