Cash Hog Prices and Cash Steer Prices Expected to Trade Lower By Dennis Smith
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Tuesday September 3, 2019
Back in the saddle. Cash is called lower but the situation is uncertain with the hurricane swirling and expected to move up the east coast. Look for a large Sat kill effort to partially make up for the closure yesterday. Last week’s kill at 2.461 was substantially lighter than the previous week. Bellies broke hard last week which weighed on the carcass heavily. The lean hog index stands at 6945 compared to Oct futures which closed Friday at 6352. Of course, cash is expected to continue to weaken as we get full blown into the fall runs. Hedging production is advised for the fall timeframe. Last week’s highs is the place to start hedging fall production. We’re working on a ASF hedge program. Details to follow. Long term the fundamentals are bullish but that’s late into the fourth quarter and next year. Choppy early trade is expected. We do not expect any kind of trade deal with China.
Most in the industry are having a hard time believing that packers will break the cash as cattle get backed up. Last week’s kill was pegged at only 644,000. Cattle are indeed being backed up. IMO packers will pretty much have their way during the next four weeks. This very likely means lower prices for fed cattle. Buying puts and selling calls is advised for Oct and Dec production, especially the Oct. Feeders are expected to break down further as well. Cash steer prices were lower each day last week in the north. Prices were established at $1.03 in the south. All prices were lower than the previous week. Use any bump higher to establish hedges.
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