Lean Hog and Cattle Futures Prices Expected to be Flat to Lower on Monday

Strategic Insights -

Chicago Mercantile Exchange pit-traded lean hog futures were expected to open flat to lower on Monday, following the declines seen on Friday and mostly lower calls for cash prices. The uncertainty about wholesale pork prices ending the week may keep buyers on the sidelines, while short-covering and technical support could lead to some buying back of previously sold positions. Meanwhile, cattle futures prices were expected to open narrowly mixed as the market sorted out various directional indicators early in the week.

Key Takeaways:

  • Lean hog futures are expected to open flat to lower on Monday due to follow-through selling from Friday's declines and mostly lower calls for cash prices.
  • Short-covering may occur if technical support holds following the recent steep declines.
  • Uncertainty about wholesale pork prices ending the week may keep buyers on the sidelines.
  • Cattle futures prices are expected to open narrowly mixed as the market sorts out directional indicators.
  • Feeder cattle may see pressure from higher grains prices, but less-than-ample supplies in the country may balance it out.
  • The October live cattle contract filled a retracement objective on Friday, touching the high of Oct. 18 with Friday's low of 97.65 cents a pound, thus filling the gap left by Oct. 19's jump.
  • Fundamentally, there is little in the market to recommend much of a futures price move this early on a Monday morning, traders said.

Statistics:

  • Friday's close in nearby and most-active October lean hogs was at 74.82 cents a pound, a 2.38 cent drop, or 3%, for the week.
  • The U.S. Department of Agriculture quoted the pork carcass composite value Friday down a modest $0.22 at $93.51, but the latest quote was $3.23, or 3.3%, off the record high cutout hit last Tuesday.
  • 97.65 cents a pound was the low for the October live cattle contract on Friday.

Sources:

  • Dow Jones Commodities News via Comtex (August 30, 2010)
  • Dow Jones Newswires; Lester Aldrich (913-322-5179; lester.aldrich@dowjones.com)
  • Dow Jones Newswires; Curt Thacker (913-322-5178; curt.thacker@dowjones.co)