First Case of African Swine Fever Reported in South Korea By Dennis Smith
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Tuesday September 17, 2019
The first case of ASF has been confirmed in S. Korea. So the disease continues to spread in Asia. It’s still spreading in China and likely continues to wipe out hogs in Vietnam. The story just keeps getting bigger. In the meantime, here in the U.S. market, cash is called lower for today. We’re likely approaching a point where the lower cash is just not going to work much longer. Yet, it’s most interesting and confusing that the hog carcass lost over $5.00 last week and was only a touch higher yesterday. The close in hog futures was wild yesterday with the fourth day of the Goldman Roll driving Dec futures sharply higher while pounding the Oct lower. Volume was 116,700 with open interest down 4,800. The Oct lost 9,600 in OI. In the wake of the nearly $10 rally in the Dec we’re committed to obtaining “event” protection….a hedge against the event that ASF is detected in the U.S. From a spec standpoint we’re long in the June and we own a few bull call spreads. Look for the backend to likely outperform the front end today.
The show list is going to come in larger this week with the negotiated volume of trade only 72,000 last week. This was down over 10,000 from the previous week and was down 50,000 from the negotiated volume this week last year. The kill should jump back up toward 645,000 this week after falling way short last week. My sources suggest the direction of the wholesale beef will be lower. Cattle-on-feed comes out Friday with estimates as follows: on-feed 99% with a range of 98-100, August placements 94% with a range of 89-98, and Aug marketings 98% with a range of 98-99. This will be the last friendly marketing number for several months. Most in the trade suspect cash will be steady. As for me, well, I suspect packers lower the bids and break the cash. We’ll be selling an early pop in the Oct LC, should that occur. Look for feeders to break down as well. Corn prices appear to be carving out a bottom.
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