By Dennis Smith
Follow me on Twitter @denniscattle
Tuesday November 12, 2019
The cutout ripped higher yesterday in the wake of the $7.00 gain in the carcass last week. Bitter cold will likely put an end to the excellent weight gains experienced this fall. In addition, hogs are being weaned off paylean. Trump will give a speech over the lunch hour and phase one negotiations will likely be discussed. We are positioned in April and June options (bullish) and we’re long a couple units of June futures. If you’re looking for leverage one might consider the Dec calls. There’s 32 DTE. When the cash market turns up there’s no limit to the moves. Packer margins have exploded over the last couple of weeks and they’re four times what they were in Sep. The weekly kill is projected to be a monster at 2.730 million pigs, up about 1.5% from last week and up 4% from last year.
Rising prices on good volume and higher open interest. Funds continue to add to their length in the LC. Seemingly the cattle market will never trade lower again. Volume was 104,000 with open interest rising by 5,700. A few hundred head traded in IA yesterday at 114-115 and at 181-182. The negotiated volume of trade last week came in at 120,800 or the highest weekly volume going back to last May. Packers have cattle around them. The show list is smaller, estimated at 263,700 compared to 270,300 last week and 234,500 last year. Show list numbers are larger in the south but they’re down substantially in the north. The weekly kill is estimated to come in at 653,000 compared to 651,000 last week. The outlook is for another round of cash strength this week. The only fly in the ointment was the fact that yesterday’s rally was not led by the Dec LC and the Nov FC.
For a free 30-day trial to the evening livestock wire that includes a midday pork and beef update, please send an email to: email@example.com<mailto:firstname.lastname@example.org>
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. In addition, the author of this piece currently trades for his own account and may have financial interest in the following derivative products: (corn, soybeans, soybean meal, soybean oil, lean hogs, live cattle, feeder cattle).