Dennis Smith from Archer Financial Services, October 22nd 2019


October Live Cattle is Attracting Deliveries By Dennis Smith

Follow me on Twitter @denniscattle

Tuesday October 22, 2019


The Chinese domestic national hog prices for 10/22 was quoted at 40.82, up 1.35. Over the last week hog prices in China are up 11.7%, for the month they’re up 40.86% and for the year they’re up 199%. Year on year they’re up 206%. Unlike the PED situation in the U.S., in which producers were able to quickly stem the pig losses and turn production back around within a year, China is NOT going to be able to turn their production around in a timely fashion. In fact, it likely will take several years to eradicate ASF. Efforts to re-populate have been failing and will continue to fail as the disease is still spreading throughout Asia. Cash (U.S.) was firm to higher yesterday and should be higher again today. The carcass reached a new recent high yesterday and this should also continue to move higher despite record large production. Futures have become a “headline” market. Headline news today is that the Chinese government has granted Chinese state companies waivers to import soybeans duty free. The hog market believes that pork is likely to experience the same. The market totally ignored the data from Friday. Traders would rather trade the headline than the real data. The screen shows a limit bid situation. Who knows where it will be when they actually open.


The show list is smaller this week, estimated at 257,200 compared to 284,200 last week. Cargill in Dodge City is back on line with yesterday’s kill pegged at 118,000. LC futures are finally attracting new players with open interest increasing by 2,400 yesterday. A general rise in OI in most contracts was evident with the exception of the soon to expire Oct. The Oct contract is attracting deliveries which should drive this contract lower today, in my opinion. There were 29 new deliveries and 10 retenders for a total of 39 certificates. The oldest long is starting to move forward. Beef was higher so you’d think packers will be willing to write a bigger check this week. But will they? We’re holding hedges but not adding right now. Feeders appear to have topped.

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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).



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