Written Commentary
CATTLE
While cash markets are trending higher this week, the advance may not be strong enough to spark more aggressive buying. However, the continued advance in the beef market in the weeks just ahead, much better-than-expected export activity and slower imports are all factors which could support a continued uptrend in the cash market. Demand factors look very strong in the weeks just ahead and the beef market has seen solid gains in the last week and this should cause higher cash markets next week as well. The USDA boxed beef cutout was up $1.12 at mid-session yesterday and closed 85 cents higher at $234.84. This was up from $228.47 the previous week and was the highest the cutout had been since March 1. Cash live cattle prices have increased about $1/cwt this week. In Kansas on Wednesday 13,272 head were reported at 114-115 with an average price of 114.99 versus an average of 113.96 last week.
In Nebraska 4,309 head traded at 114-116 with an average of 115.47 versus 114.17 last week. In Texas/Oklahoma 7,742 head were reported at 113-115 with an average of 114.99 versus 114.10 last week. The USDA estimated cattle slaughter came in at 121,000 head yesterday. This brings the total for the week so far to 354,000 head, up from 342,000 last week but down from 367,000 a year ago. June cattle closed slightly higher and the buying pushed the market up to the highest level since March 18.
LEAN HOGS
Just when you think that the pork cutout value has run up to far, too fast, a surge higher in the ham market and a continued strong advance in the cash market leaves the market in a steep uptrend. The USDA pork cutout, released after the close yesterday, came in at $109.30, up $5.02 from $104.28 on Tuesday and up from $99.78 the previous week. This is the highest the cutout has been since May 15, 2020. Hams were up $17.05 to $97.54. April hogs closed sharply higher on the session yesterday and gapped into new contract highs. A continued strong advance in pork product prices, a strong export tone to the market and expectations for a seasonal decline in production are all seen as positive forces. June hogs closed moderately higher and challenged the March 18 contract high. The CME Lean Hog Index as of March 22 was 93.47, up from 92.71 the previous session and 89.91 the previous week.
The average hog weight for Iowa-Southern Minnesota as of March 20 was 287.4 pounds, up from 286.8 pounds the previous week and 286.2 a year ago. The USDA estimated hog slaughter came in at 491,000 head yesterday. This brings the total for the week so far to 1.437 million head, down from 1.469 million last week and down from 1.501 million a year ago. For the USDA Hogs and Pigs report, traders see All Hogs and Pigs on March 1 at 100.1% of last year, 99–101.3 range. For breeding supply, traders see 98.7% of last year, 97.4–100.4 range. For Market animal supply, traders expect 100.2% of last year, 99.2–101.6 range. The December–February big crop (July–September slaughter), is expected near 100.7% of last year with a range of 98.9% to 102.4%.
Risk Warning: Investments in Equities, Contracts for Difference (CFDs) in any instrument, Futures, Options, Derivatives and Foreign Exchange can fluctuate in value. Investors should therefore be aware that they may not realise the initial amount invested and may incur additional liabilities. These investments may be subject to above average financial risk of loss. Investors should consider their financial circumstances, investment experience and if it is appropriate to invest. If necessary, seek independent financial advice.
ADM Investor Services International Limited, registered in England No. 2547805, is authorised and regulated by the Financial Conduct Authority [FRN 148474] and is a member of the London Stock Exchange. Registered office: 3rd Floor, The Minster Building, 21 Mincing Lane, London EC3R 7AG.
A subsidiary of Archer Daniels Midland Company.
© 2021 ADM Investor Services International Limited.
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.
