Kleist Comments

MORNING MEATS 1/17/14
MORNING MEATS 1/17/14

CATTLE: Cash cattle so far: $141.-144.00, Neb. dressed $226-228.00; on 99 boxed loads cut outs higher at up. $4.17 @ $228.79(c)/up. $3.60 @ $225.57(s) on light/moderate demand; Carcass Equivalent: $211.39 up. $2.75. Record high cattle/beef prices.

COMMENTS: Older readers might remember an old soybean bull market saying: when the cab drivers start talking about it…it’s over. Well besides major radio coverage, CNBC also delivered a bullish meat counter report over record high prices. I will refrain from some saying a top in in with that and the ‘mini-reversal’ yesterday. But I will not yet change from a trading affair stance (I know, that attitude missed this latest leg up higher on position trades). Retail beef starting post increases, to wit: the price leader rib-eyes at $8.86/lb. vs. $8.32 previous week and $8.19 year. Now, hamburger prices are slightly lower possibly to drive consumers in. My point remains the economy, to me, suggests not being able to SUSTAIN theses record high (or even higher) prices. As such saw no reason to exit hedges except if selling cash a bit early. Open interest little changed in total even as Feb. drops 8550 (April picked up 5740) amid very strong volume (near 100,000!), and this the day of the ‘reversal’? One can be as bullish as one wants and perhaps I am a lonely heifer among storming bulls. But I’ll use protection and wait for a short sign, until then a trading affair in rarified air.

Only because I do not trust demand to hold up.

HOGS:

Interior cash hogs higher @ up. $.06 (w)/up. $.56 (e) with rough avg. $77.90; pork cut outs up. $1.39 @ $85.19. Lean index as of 01/15 @ $80.11 dn. $.14.

COMMENTS: Cash hogs steady-ish again? The future’s premium are saying 1) the ‘glut’ of hogs will come down and 2) pork will be the retailer poster boy at some point. The problem is, I find it tough to buy April’s $14.00 premium to the interior (and $12.00 to the lean index). Granted, we’ve seen the cash hog price escalate sharply in bull’s past. For now, as mentioned several times April failed to live up to an upside breakout; we just did for the first time since December crawl over the major m/a’s at $92.02-91.92.

Therefore, If I had to probe the long side I’d buy the Feb. on a good break. Still about 4 weeks for that contract. Unofficial recommendation in a trading affair stance. Hedgers? Add on a few at $92.00.

Kleist Comments

This is John Kleist, of Kleist Ag Consulting.
Questions? Email me: johnwkleist@sbcglobal.net

Disclaimer: Trading options and commodities involves risk of loss and my not be for every investor. Past trading results may not be indicative of future performance. Although information and opinions provided herein are compiled from sources believed reliable, the sender, EBOT Trading, or its principals cannot attest as to accuracy or assume any responsibility for any errors or omissions as the information may not be complete or events may have changed.