Kleist Comments

MORNING MEATS 1/27/14
MORNING MEATS 1/27/14

CATTLE: Cash cattle last week: $147.-150.00, Neb. dressed $239-241.00; on 71 boxed loads cut outs lower at dn. $1.29@ $237.26(c)/dn. $.68 @ $236.25(s) on very light demand; Carcass Equivalent: $221.36 up. $.27.

COMMENTS: In the minutia of things, the Cattle-On-Feed report was slightly bearish on placements (101%, avg. est. 98%) and marketing’s (99% vs. 102%) with on feed 95% (vs. 94%). This market is fully dependent on when and if beef tops out and it has been showing cracks in its armor (by the way, the marketing number made my view of the cold storage report a bit negative). Open interest rose 1,265 even as Feb. falls 1677 amid moderate volume; C-O-T report: leaned bearish. As before, buying on breaks for the well heeled due to volatility: it’s not like the rotisserie ad to “just set it and forget it”. I’ll worry about supply later (placement number), for now it seems crunch time is approaching for the retailers but I am not smart enough to know just when. These beef price losses are peanuts as per the packer margins so I am trying not to get sucked into that bear trap. Hence, except for hedgers, I have no guidance. Nearby support $142.70-141.90 (yes I know fairly large but, hey), a close under $140.35 a likely near term bull defense in the ‘big picture’. For now anyway.

HOGS:

Interior cash hogs mixed @ dn. $1.90 (w)/ N/C.(e) with rough avg. (w) $78.75; pork cut outs up. $.17 @ $87.15. Lean index as of 01/23 @ $80.89 up. $.43.

COMMENTS: Cash hogs look lower. The arctic cold is extended enough to suggest a back up: from the producer to the packer kills/shipments levels. Hence dance carefully with this premium in the April. Until then, turn chartist and all is well: April neared its Dec. high of $94.22 before backing off a tad, the next major upside objective would be the contract highs of $96.42 from Oct.; the ‘confluence’ of m/a’s underneath at $92-91.50.

Open interest rose 1,900 led by Apr./June amid moderate volume; C-O-T report: leaned bearish.

Kleist Comments

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

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