CATTLE: Cash cattle last week: $158.-159.00 and $249-250.00 dressed ; on 117 boxed loads cut outs mixed @ up. $.59 @ $250.57(c), dn. $.36 @ $242.26 (s) mod. demand; Carcass Equivalent: $235.12 up. $.33.
COMMENTS: Implosion an apt word for the drop from $156.50 highs to $149.50 currently. Likely part of it because the market was saturated with longs and bullish enthusiasm and ‘never have another bad day’ psychology. Weekly beef export sales rebounded sharply to 17,900t led by Japan at 9,500t; some suggested it was the Index Fund’s lemming-like exit from the August that triggered it but the ‘boys’ knew that was coming and prepare for it. Now, the technical are worrisome: besides reversals yesterday’s volume was huge, open interest fell 3,300 led by August off 12,800. August cattle in my prime bull-defense area and a close down here back to neutral/bearish. IF just a correction, it’s the largest of the move. Charts are obvious, fundamentals not so much yet.
Interior cash hogs mixed @ up. strongly (W), N/E (E): rough avg. $N/A. Pork cut outs rose $.54 @ $134.44. Lean index 07/08 @ $130.93 up. $.85.
COMMENTS: August hogs still ‘range bound’ but dropping to a very dangerous area: major m/a support at $127.70-127.32, an area it has held above through spring and summer (so far); open interest rose 2100 even as August fell 7,000, volume strong. Back hogs reacting to the cattle crunch (need margin money?) and the close might indicate keeping as a trading affair or a bear market. Slippery slope: some talk that NOW (or very soon) will start the biggest effect on kills for the next 60 days due to PEDv. Again? Well, it’s worked before. Weekly export sales fell 27% to 8,900t, of note China buys 500t of it!