Cattle & Hog Market Recap for 9-7-10
October cattle pushed sharply lower on the session with heavy selling from fund traders late in the session and pushed to the lowest level since August 18th. Weakness in the stock market and ideas that the market is overbought helped to pressure. Traders saw the weekly COT report showing that trend following funds (non-commercial traders without commodity index funds) added 7,506 contracts for the week to a net long of 115,104 as a sign of an overbought condition. In addition, a weaker tone to beef prices late Friday and concerns for a lull in consumer demand ahead helped to spark some long liquidation pressures. Talk that weekend beef clearance was slow due to the sluggish economy and this helped to spark long liquidation selling late in the day. A jump in the US dollar and weakness in other markets was also seen as a negative force. Traders indicated that if weekend clearance was slow that beef prices and cash cattle prices could come under increased pressure this week. Boxed-beef cut-out values were down 22 cents at mid-session to $162.45.
October hogs fell sharply late in the trading session to give back most of last week’s gains before finding some support near the 75.50 level. The heavy fund selling in cattle bled over to the hog pit and traders are a bit nervous over retail clearance of meat for the Labor Day holiday and that retailers will not need much in the way of fill-in business. The hog market inched lower in quiet trade early in the session as traders expected some consolidation-type trade after last week’s strong gains. Weakness in pork values led by loin prices on Friday helped to pressure the market after trading higher briefly in the early going. The lean index was down 71 cents and this may have added to the negative tone coming from outside market forces. Cash hogs traded steady to higher today with Peoria hogs trading $1.00 higher. Tight supply of market ready hogs combined with positive profit margins for the packer are seen as positive forces for the cash hog market this week. The sharply higher US dollar was seen as a negative force.
After reading the hog and cattle commentary, traders might want to take a peek at the commercial traders momentum. The Commercial Trader momentum can be tracked by using the Commodity Futures Trading Commission Commitment of Traders reports. Our idea is that, in a value driven commodity futures market no one knows fair value like the people who produce it or, have to use it. In fact, it is precisely their sense of value that provides the commodity market’s rhythmic meanderings that swing traders love so much. Let’s face it, producers know when their product is overvalue and it should be sold just as well as end line users know when they should be stocking up at low prices. Therefore, trader should be able to incorporate this valuable information into their future market education.
This blog is circulated by Andy Waldock. Andy Waldock is a financial advisor, trader, analyst, broker and asset managerfor Commodity & Derivative Advisors, located in Sandusky, Ohio. For that reason, Andy Waldock may have positions for himself, his relatives, or his customers in any commodity future market discussed. The blog is meant to develop a discussion and educate those with an interest in the commodity future markets. The commodity markets may not be advisable for all investors due to the high degree of leverage. Investing in the commodity futures could result in considerable risk. If you are interested in reading other published articles, commenting on his writings or subscribing to Andy’s blog, please visit http://blog.commodityandderivativeadv.com, or if you have any questions, please call 1-866-990-0777.
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