Beef Export Bookings We’re Strong Last Week By Dennis Smith
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Tuesday February 5, 2019
After pressing into new recent lows early on Monday April hogs shot higher and touched limit up after the 1:00 close on Monday. Volume of trade was reported at nearly 70,000 with open interest rising by 2,400 cars. With the exception of the soon to expire Feb, open interest was higher in all hog contracts. Most will be watching closely to see if April happens to gap higher today and not fill the gap. This would leave a seven day island bottom formation on the chart and nullify a massive island top formation currently in place. That’s all technical in nature. Fundamentally, we believe the U.S. pork industry is just weeks away from seeing demand begin to surge as China is expected to step into our market in a major way. If we saw a major turn in the market yesterday, it should be followed with another surge higher today.
I need to clarify a statement made in last night’s wire that does not appear to be fully accurate. We’ve learned this morning that beef booked for export business was very strong last week. This partly explains the surge upward in the choice cutout value. So the short fall in the kill and the surge in export business should support the wholesale beef complex again today, presumably. There were zero deliveries posted against the Feb LC with the oldest long way back at Feb of last year. The show list is down 17,000 head from last week. Still, the mud situation remains in place meaning that we’re speculating that packers are not likely to chase and bid strongly for cattle in this condition. In today’s market look for resistance in the Apr LC starting at yesterday’s high of 12770 and lasting until 12800. We’re short term negative but long term bullish. We’ll get a fresh look at the meat supply/demand tables this Friday when the grain supply/demand report comes out.
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