Livestock Market Analysis: October 4, 2010

Strategic Insights -

The Chicago Mercantile Exchange is expected to open flat to lower on Monday, October 4, 2010, due to a sharp drop in wholesale pork prices and follow-through selling. Analysts predict that live cattle futures will be steady to weak on expectations of a lower cash cattle market. The deferred hog contracts may also be pressured by lower corn prices, which could encourage producers to maintain or add to their breeding herds.

Key Takeaways:

  • Chicago Mercantile Exchange lean hog futures are expected to open flat to lower on October 4, 2010, due to a sharp drop in wholesale pork prices.
  • Live cattle futures prices are expected to be mixed with a softer tone, with many traders expecting the week's direction to be lower.
  • Cash cattle markets are expected to show some weakness this week, which could lead to a decline in feeder cattle futures.
  • The USDA reported lower wholesale prices on Friday, and meat market analysts said buying interest is fading as the market heads into fall.
  • Meat prices remain susceptible to seasonal price pressure, and analysts expect further technical pressure if the December contract were to close below the September low of $97.85.
  • A private trader noted that a bearish tone for futures on Monday is due to Friday's move higher followed by a reversal to the downside and a close near the day's low.
  • Feeder cattle supplies rise at this time of the year as cattle are removed from dying pastures and sent to feedlots, which could lead to further pressure on feeder cattle futures.

Statistics:

  • Wholesale pork prices dropped sharply on Friday, October 1, 2010.
  • The deferred hog contracts may be pressured by lower corn prices, which could encourage producers to maintain or add to their breeding herds.
  • Live cattle futures prices are expected to be mixed on October 4, 2010, with a softer tone due to expectations of a lower cash cattle market.
  • The USDA reported lower wholesale prices on Friday, October 1, 2010, which could lead to further pressure on the market.
  • Meat prices remain susceptible to seasonal price pressure, with analysts expecting further declines in the coming weeks.
  • The December contract for lean hog futures is expected to close below the September low of $97.85, which could lead to further technical pressure on the market.

Sources:

  • Comtex SmarTrend Alert, accessed via Comtex News Network, Inc. website on September 30, 2010.
  • Dow Jones Commodities News, accessed via Dow Jones & Company, Inc. on October 4, 2010.
  • USDA website, accessed via USDA.gov on October 1, 2010.
  • Comtex News Network, Inc. website, accessed via www.mysmartrend.com on October 4, 2010.