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Pork Competes With Beef

MORNING LIVESTOCK FUTURES OUTLOOK

Pork is cheap compared to beef and going forward, as inflation remains high and food prices remain high, pork will compete with beef.

LIVE CATTLE

There was a higher boxed beef market and over the coming week beef prices will be a key factor for cattle prices.  Packers are going to pass on cattle that aren’t finished to their satisfaction. With very little change on June Live Cattle, up 12 cents from last week,  and cash prices dropping from $2.00 to $5.00, the wide difference between the cash and futures is indicating cash prices likely have more downside.

LEAN HOGS

Packers are not going to push hogs when the CME Lean Hog Index is only $1.51 below the CME Pork Index. Add in the costs from fixed and variable expense, and buying daily hogs to price of daily pork sales is a loser for a packer.   Packers are going to kill hogs and sell pork for contract orders and back down on daily buy.  Currently, hog numbers have fallen off and packers may need hogs to fill contracts from the daily buy and sell off cuts that are left over.  Pork sales volume is light.

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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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