Missiva de hoje vai ser curto como estamos nos movendo para novos escritórios. Não pode, ou não pode, be a report tomorrow depending on our ability to be up and running tomorrow.
Things are looking up in daily hog fundamentals. We put an additional 43 cents on pork product Friday and were up a large $2.57 para a semana. Colocamos $1.97 on product the previous week, and this 2-week total of $4.54 is quite good for the first two weeks in May.
Volume de carne de porco semanal por grosso de 457 cargas foi 15% ao longo da semana anterior, 13% over last year and a large 39% over this same week in 2010. It does appear that wholesale pork trading 15% under last year is finding decent near term demand. It will be interesting to see if this lasts more than a few weeks. In any event, the short side of hog futures appears limited for this week and possibly through next week.
The problem continues to be the basis premium that June hogs hold to the present lean hog index. We went home this past Friday with June hog futures at a 595 premium to the lean hog index (7935). Ano passado, we had June futures with a 246 premium and we have a 5-year average premium of 215. The lean index was 157 lower last week — quase 14% sob no ano passado — although we were up lower last year and 25 lower for this week in 2010.
June hog futures are on a 5-day rally of a small 158 points as traders continue to anticipate the normal seasonal reduction in weekly harvest levels (normalmente, harvest declines 125,000 head per week into July) and corresponding increase in packer operating margins as pork product works higher on harvest reductions. The problem remains as to when the cash hog market will find its bottom.
Pork packer operating margins went home this past week at a small eight cents negative. This is the best their profit margins have been since the third week in February. Esperançosamente, this much better cutout will be supportive for cash hogs this week as farmers push to complete corn plantings thereby limiting daily cash hog receipts at pork packer buying stations.
We need to stay away from the short side of hog futures this week. You should be out or long. At present, the short side belongs to clowns, fools and jugglers.
We want to revisit being long June hogs against short June cattle sometime the latter part of this week should the cash hog market start higher.
This is the toughest time of the year to be long cattle futures. Boxed beef starts lower into July and/or early August resulting in cash cattle having a normal seasonal break of 12% para 14%.As we have talked before, should this break come from our $131 highs in February, we could take present $122 cash cattle to $112. If we do see the normal price decline from $122, we could see cash cattle go into the $105 área. In any event June cattle futures at $115.15 appear to be overpriced for this time of year.
Choice boxed beef was 82 cents lower Friday and down $1.19 para a semana de encontro a ser $2.36 lower last week and $1.78 lower for this same week in 2010. It does appear that the seasonal decline in boxed beef prices has started as retailers usually have pre-book spring/early summer grilling business. Don’t forget that last Thursday’s choice boxed price of $191.51 was just 3.5% from the all-time high made several months ago. High gasoline prices and record high beef retail prices will keep a lid on prices into summer.
This is a tough week to be short June futures as the Goldman Roll is now finished and many times we see floor traders buying June in years when there is a decent discount in June futures price from cash cattle. Além disso, the June cattle butterfly usually starts higher this week as the G.R. comes to its end. We are waiting to try the short side in June cattle futures should they get into the $118 para $120 area in the near term.
Today is the 15º trading day from the lows in June cattle. We have talked of the natural tendency for meat futures to have a 2- or 2-week advance after a large move to the upside or downside. We should be about at this are this week.
We also plan to revisit the short June cattle-long June hog trade in the near future if/when the cash hog market finally finds its seasonal bottom.
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