Dennis Smith from Archer Financial Services

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Thursday March 18, 2021

LEAN HOGS:

Weekly pork export sales were solid at 39,700 MT, up 5% from the 4-week average. The largest buyers were Mexico, China and Japan. Shipments were stellar at 40,600 MT, also up 5% from the 4-week average. The largest receivers of pork last week were China, Mexico and Japan. The Philippines was also heavily involved in U.S. pork last week. Open interest in hog futures on the surge higher yesterday was up 2,935. The up-trend is solid. The gaps remain unfilled. April hogs are working on an upside breakout on the weekly chart. A close tomorrow over 9300 will complete and confirm the upside breakout. Cash should be higher again today. If hogs pull back today we’ll be buying June and buying the 102 puts.

LIVE CATTLE:

Open interest was up 1,280 on the move higher in LC futures yesterday. The bull spread turned strong with April leading all contracts higher, despite news that cash was trade only steady and not higher. I’m hearing increased talk that some bids edged up to $1.15 with talk of some higher trade occurring in IA. I’m also picking up from sources that cattle purchased and scheduled to be shipped next week are instead requesting shipment this week. The weekly slaughter report will give us another look at cattle weights. They’re expected to drop. On-feed comes out tomorrow. Traders interested in the bull spread may want to take a shot at buying the Apr/selling Jun. April LC options have two weeks, expiring on April 1st, the Thursday before Good Friday. Perhaps a leverage shot here? The April 122 calls settled yesterday at 45 points. Buying a slug of these at 30 points just might work? I nearly forgot, weekly beef export sales were solid at 25,900 MT, up 39% from the 4-week average. The largest buyers were Japan, S. Korea and China. Shipments were 17,800 MT, up 4%. The largest receivers of beef were Japan, S. Korea and yes, China.

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