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Weekly Pork Export Sales were Awful, Down 51 percent From 4-Week Average

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Thursday October 19, 2017

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Cash hogs continue to climb the wall of supply as packer margins are now starting to narrow rather significantly. Yesterday the cash was quoted on the late wire $1.50 higher. Early calls for today are higher. The kill was large, reaching a new daily high at 464,000. The two new hog plants continue to slowly ramp up production. Adding two new players has actually spurred competition. This is something we knew in theory should occur but we werent sure it would actually would happen. It has. Assuming firm bids into tomorrow cash will be higher for three consecutive weeks. The hard part, now, is determining whats next in hog prices, futures and cutout? Honestly, we dont even have a strong opinion.. Record high production at this time of year normally results in lower cash, sinking cutout and lower trending futures. Were not sure that normal is something that applies to the markets any longer. Weekly pork export sales were awful, down 51% from the 4-week average. Shipments were unchanged. Sales were half that of shipments which is not a good trend when processing 2.5 million pigs per week. Theres nothing to conclude from volume and open interest. Look for a test of resistance early. I define resistance in the Dec hogs as the range from 6400-6450.


Live cattle futures rallied impressively off the session lows yesterday as the trade began to anticipate another round of rising cash steer prices. It never happened, at least yesterday. Light trade was reported mostly at $1.10, down 1 cent from prices paid last week. Prices in IA have been weaker all week although on light volume of trade. After being quoted higher at noon the choice beef was lower on the closing report, down .40 at $197.26. Beef looks rich compared to this time last year, running about 8% higher. After some maintenance issues on Monday the slaughter pace is back to full speed with yesterdays kill pegged at 118,000. Weekly beef export sales were down 13% from the 4-week average. Shipments were down 1%. Finally, JBS Brazil has been forced to close 7 plants in Brazil at least temporarily due to an asset freeze slapped by the Brazilian government. Theres some talk this will give U.S. exports a shot in the arm. Feeders closed lower yesterday with the Nov violating key support before recovering late. We continue to add to hedges.

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About the author

Dennis Smith has been a full service commodity broker specializing in grain and livestock trading for over 25 years. Dennis has a wide range of customers, many of whom are grain and livestock producers. Dennis develops and helps execute hedging and speculative strategies in his Daily Livestock Wire which is prepared each afternoon exclusively for his customers.

Dennis grew up in Central Illinois before launching his brokerage career.

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