Kleist Comments

MORNING MEATS 2/07/14
MORNING MEATS 2/07/14

CATTLE: Cash cattle last week: $144.00/145.00 south, $146.00 and $230-232.00 Neb.; on 128 boxed loads cut outs lower at dn. $3.13 @ $213.51(c)/dn. $4.32 @ $212.31(s) on moderate demand; Carcass Equivalent: $206.47 dn. $1.85.

COMMENTS: Unless the packers have a magic margin accounting, all signs point to the $140-141.00 live area, maybe more. They are staking out their ‘revenge’ for having to pay sharply higher cash prices while beef demand collapses. It might also make next week another down week and perhaps $136-135.00 with it. Retail report was scary as per beef prices now, even the sacred ‘ground beef’ category. Add in U.S. employment numbers and the picture seems grim. Hence, Feb. priced right for this week’s trade but what about next week’s? This also leaves a conundrum with the April: ‘normal’ basis $5.00 over and as such covers the low end of the projection for next week. But can we spec buy it? Charts suggest would be bottom picking though prices want to hold. Let’s see, the month of April: brings to mind and old school saying as ‘what’s the BEST month for beef demand?….May, what’s the worst?….June’. Therefore it’s a possible question of will expected tight supply of cattle override expected consumer demand and just keep retail prices historically high until supply improves?

I am a demand man inside. As such it will take a lot for me to get willy-nilly bullish over supplies.

HOGS:

Interior cash hogs mixed @ up. $1.07(w)/ no/comp. (e) with rough avg. (w) $81.82; pork cut outs up. $.14 @ $90.18 in a quiet trade. Lean index as of 02/05 @ $83.61 up. $.36.

COMMENTS: Cash hogs called firm again over weather concerns. Once again, a significant jump in pork volume daily sales fell back to middle of the road levels yesterday. Funds are bullish up here, and I have been whacked when hogs made moves over $100.00 in the past, but there’s anecdotal evidence April is way ahead of itself. As such, we’ll probe the short side with a likely near term bear defense a move/close over contract highs. Yes, I know the PEDv deal is a major feature but we cannot test it until weather backups are worked through.

Kleist Comments

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

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