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Morning Livestock Commentary 6/19


With futures coming off the session lows into the close for the second consecutive session, open interest yesterday jumped by 1,360. Overnight China has made a statement that they’ll accelerate the purchase of U.S. ag goods to meet the phase one trade agreement. This should be good news for hogs. The Chinese will only buy commodities that they need. THEY NEED PORK.After four months they’ve only secured 13% of the value they’ve committed to purchasing. Pork should be the big winner here, especially in light of the current price structure. So, take the strong possibility of increased export business with the fact that the U.S. is in the process of re-opening the food service sector and combined with the fact that we’ve embarked upon a massive sow liquidation phase, hog prices should bottom out.



The basis is now about $5 after residing at $20 a couple weeks ago. Cash has been doing most of the work. On June 1stcash steers traded at $1.18. Yesterday there was trade reported at 98 cents and as low as 96 cents. There were 10 deliveries posted against the June LC contract yesterday. The oldest long stands at Feb 3rd.OI in the June is 5,700 cars. Beef continues to grind lower and my sources suggest this will continue. The basis is swinging and soon all contracts will be premium to the cash. However, given the production coming down the pipe in the third quarter, up roughly 15% from this quarter, we’re expecting lower cash and lower futures. On-feed comes out today. Trade guesses are; on-feed 98%, placements at 95% and marketings at 74%. Hedging in both fats and feeders has been highly advised. Feeders closed lower yesterday and open interest was higher in every FC contract. Total open interest was up 509. Look for a mixed to higher open followed by a lower close, IMO.


The risk of loss in trading futures and options on futures can be substantial. The author does not guarantee the accuracy of the above information, although it is believed that the sources are reliable and the information accurate. The author assumes no liability or responsibility for direct or indirect, special, consequential or incidental damages or for any other damages relating or arising out of any action taken as a result of any information or advice contained in this commentary. The author disclaims any express or implied liability or responsibility for any action taken, which is solely at the liability and responsibility of the user. This report is a solicitation.

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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