CATTLE: Cash cattle so far: $147.-150.00, Neb. dressed $239-241.00; on 102 boxed loads cut outs higher at up. $.33@ $240.05(c)/up. $.29 @ $237.44(s) on light/moderate demand; Carcass Equivalent: $218.37 up. $.22. Record high cattle/beef prices.
COMMENTS: There is nothing ‘logical’ I can come up with to sense a top is in or is forming. Futures risk is largely unacceptable for new positions except the very well-heeled. I also understand hedgers are being squeezed but it’s no time to be naked, no matter how bullish the chatter (read $155.00 as possible due to widely profitable packer margins). Hence, time for a story: way back when, in my first (and first hand) pre-historic, parabolic cattle bull market I witnessed a phenomenon: Egg manufacturers’ and Pasta manufactures’ went 24/7 (term not invented yet!). Why? Consumers finally balked at beef prices and went looking for alternative PROTEIN sources. Even though I want cattle feeders to finally get their due, and way overdue due, this economy might have problems with beef demand should retailers pass along prices. And if so, the break in prices will likely be just as hard down as they were up. Speculatively, I am a coward I trying to call a top. However, I am working on an options strategy (both spec and hedge) “just in case” the cab drivers are bullish. By the way, open interest rose ‘only’ 2,300 even as Feb. drops 7265 amid stratosphere volume of 113,320.
Interior cash hogs mixed @ up. $.59 (w)/ N/C.(e) with rough avg. $77.50; pork cut outs dn. $.11 @ $86.07. Lean index as of 01/21 @ $80.17 dn. $.16.
COMMENTS: Cash hogs called mixed as weather a serious disruption. Pork Congress underway and talks center over PEDv. And some talk higher wts. might be ‘masking’ the lessened kills. If that’s so, PEDv will be even harder to categorize. But April hog’s premium still pumped up, in part, due to it. Cold Storage report: bit negative but blamed on wts. with stocks up on month/year (by the way, bacon prices soaring at retail yet in storage there’s 80.5mln.lbs. vs. 36mln. yr.); chicken stocks lower on month (beef clue?) and slightly higher on year. Open interest fell 4,421 led by Feb. off 3600 and April off 1800 amid good volume. I’m playing the charts here for now.
***WEEKLY EXPORT SALES TOMORROW***********