Morning Livestock Report July 9
The development in the ham market, if it continues today could be the first bit of solid, friendly news for the hog market in a long while. Weekly pork export sales were excellent (it’s not made any difference to futures) at 31,500 MT, up 6% from the 4-week average with Mexico the largest buyer last week, soaking up 9,100 MT followed by China which bought 8,100 MT. Vietnam made their largest purchase ever, taking 2,000 MT last week. Shipments were also excellent at 33,500 MT, up 7% with China receiving 12,700 MT followed by Mexico which took in 10,300 MT. These numbers are solid but they’ve also not made a difference in the face of gross oversupply. So, it’s all up to the ham market to drive the cutout sharply higher. Recommend buying Aug LH puts with no other sell recommendations at this time. From a spec standpoint we have no position. OI in hogs, on the first day of the roll, was down 1300 cars.
I’m picking up conflicting items on the bull/bear debate in LC. There’s some evidence that heavy weight cattle, the serious backlog is being whittled away. However, there’s also evidence that packers, unhappy with margins narrowing each week, are slowing the chain speed. This is not a good time of year for beef demand and the food service sector remains hobbled. So, futures traders fight back and forth. Short term, I’m expecting to see a test of support at 9800 in the Aug. Open interest, on the first day of the roll, was down 8832 with open interest in the Aug dropping by nearly 14K. Corn futures are back up today which should usher in some selling in feeders.
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