Weekly Pork Export Sales And Shipments Were Solid

By Dennis Smith

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Thursday December 5, 2019

LEAN HOGS:

Guess what, cash hog prices are expected to trade fully steady to higher again today. This is occurring in the face of what surely will be a record large weekly harvest, a slaughter approaching 2.8 million pigs. Carcass values have slipped slightly so far this week mostly due to weakness in the fresh belly primal. My sources suggest against betting that bellies will continue to decline in this demand environment. Recall that the quarterly hog & pig outlines the idea that butcher hog numbers should drop off from 105% to 102% of last year. Weekly pork sales were solid at 30,600 MT with both China and Mexico buying just over 10,000 MT for shipment during December. Australia, Canada, Japan, and a new customer, Nicaragua were buyers of U.S. pork last week as well. Shipments were also solid at 33,100 MT with China taking delivery of 11,500 and Mexico receiving 9,400. Were waiting to see if Feb can/will close over 6900 which will signal a test of the 40-day MA. The higher tone in the cash is impressive and should sponsor a higher board today, in my opinion.

LIVE CATTLE:

Futures volume on Wednesday was 63,100 with open interest edging downward by 650 contracts. Theres not much to conclude from this information. Futures appear ready to challenge major support which I define as 12340-12290 in the Feb. Will this level hold if tested? The board has been down for four consecutive sessions but the correction thus far has been very shallow. Feeders, in contrast, are well off their recent highs. The beef is headed lower and the choice/select spread has topped. The industry is fully convinced theyll receive steady to higher money for the show list. Those ideas may begin to evaporate if futures fail. Weekly beef sales were zero with shipments reported at 14,600 MT. Japan and South Korea each took a chunk of U.S. beef last week. Im expecting the funds to continue unloading length, forcing a test of support.

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