Kleist Comments


CATTLE: Cash cattle last week: $142.00 south, and $225.00 Neb. (some $142-143.00 live); on 120 boxed loads cut outs higher at up. $1.86 @ $213.85(c)/up. $.77 @ $211.49(s) on moderate demand; Carcass Equivalent: $204.80 up. $.92.

COMMENTS: USDA: Avg. steer price up 8% to $136.00 in 2014; cattle-on-feed report avg. est.’s—On Feed dn. 4.5%; Placed up 2.5%; Marketed dn. 4.5%. Trade talk might be the reason futures not building too much a premium just yet, fall placements could likely raise kills in March; beef demand is not that stout gentlemen, retailers so far just scrambled on the break to refill coolers; U.S. Jan. real earnings rose on .1% and just up .4% on year; open interest rose 2,524, largely in the June, amid good volume. I am tempted to probe the short side, but for now would like April back closer to contract highs if possible. For now then, still treating as a trading affair.


Interior cash hogs mixed @ up. $2.21(w)/not/est. (e) with rough avg. (w $90.30); pork cut outs dn. $1.03 @ $89.04, led by bells and hams. Lean index as of 02/18 @ $88.48 up. $1.07.

COMMENTS: Cash hogs called steady/higher but might be ‘less high’ on packer cut outs and as weather temporarily allows better logistics. However, a return to below 0 night time temps next week may again be a problem. USDA report: Hog prices seen dn. 2% to $63.00hwt.; broilers dn. 2.2% to 97.50hwt.; steers up 8% to $136.00hwt. Now to the PEDv situation and how hard it will be to be subjective:

“The size of the US hog herd may not grow as fast as previously expected as a disease that kills piglets spreads. Porcine Epidemic Diarrhea virus will “sharply limit the supply of hogs compared to earlier expectations,” the USDA said in a report today. Mortality rates have been highest among baby pigs, which will slow expansion of the herd, the agency said”. (Dow Jones wire).

Guess one cannot be blindly bearish but can one be blindly bullish up here? As mentioned, consider what the price of pork will be IF cash hogs are $107-108 or beyond this summer. Even with historic highs in cash cattle at $150.00 fell back to the $140.00 area when beef DEMAND evolved and as numbers did not increase. Plus this futures market is rallying exponentially leaving downside gaps in its wake. Maybe I will not argue with the April but will with the June/July on hedges. Speculatively pulling out the charts and the margin money. Open interest ROSE 4,480 led by J/Z up 2300 while the rest of the months up modestly. Dance floor getting crowded? However this time that PEDv is our dancing partner.

Kleist Comments

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

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