John Nelson Hog
Outlook
Producers
Commodities –
August 19, 2008
LIVESTOCK MARKETING RECOMMENDATIONS
We have recommended from 25-75% hedge protection out to June of next year, which is good enough for now. We would still view rallies as additional hedging opportunities for the spring & summer of next year.
LIVESTOCK FUNDAMENTAL COMMENTS
Last weeks’ cash trade held together rather well, considering the time of year. Good grade & yield hogs sold from $66-67 on a live weight basis, down about a dollar from the previous week. Numbers did increase somewhat last week, and should continue on the rise into the 4th quarter. Packers like to see this increase in numbers, as they currently have very good margins to work with, now estimated at a positive $8.80 per head, up nearly $5 per head over the past week or so. This could actually help to hold together cash prices, as they should push for an even larger kill this week. Export demand continues to be the leader, although the reported volume of pork trade was rather disappointing last week. The volume traded was the smallest weekly total since May, so it could be that price is having an impact on retail sales. Weights did loose ground last week, but we should be close to a seasonal bottom, moving seasonally higher into the 4th quarter. The USDA will issue its’ monthly cold storage report this Friday.
USDA STATS
Last weeks’ hog kill of 2.143 million head was up slightly
from the previous week and still up a whopping 8% from the same week last year.
Average carcass weights dropped 1 lb. last week to 195 lbs.,
compared to 197 lbs. last year.
Iowa/Southern
Total pork production last week was up slightly from the
previous week and up 7% from the same week last year.
The pork carcass cutout remains very strong, as the carcass cutout gained another $1.09/cwt. last week to $94.00 on slow movement.
