Livestock Market Update: Pressure from Lower Wholesale Pork Prices and Goldman Sachs Commodity Index

Strategic Insights -

The Chicago Mercantile Exchange lean hog futures are expected to open mostly weaker on Wednesday due to pressure from lower wholesale pork prices on Tuesday and a flat to weak cash market call. The roll of August long positions into October, associated with the Standard & Poor's Goldman Sachs Commodity Index, may also lead to more money coming off deferred contracts. Nearby July futures are expected to trade in a narrow range, tracking closely with cash prices ahead of its expiration on July 15.

Key Takeaways:

  • The Chicago Mercantile Exchange lean hog futures are expected to open mostly weaker on Wednesday due to lower wholesale pork prices and a flat to weak cash market call.
  • The roll of August long positions into October, associated with the Standard & Poor's Goldman Sachs Commodity Index, may lead to more money coming off deferred contracts.
  • Nearby July futures are expected to trade in a narrow range, tracking closely with cash prices ahead of its expiration on July 15.
  • Pork belly futures are expected to trade flat to firm on possible followthrough buying from the limit higher closes in July and August on Tuesday.
  • Weaker fresh belly prices reported by USDA may temper gains and bring in some selling interest.
  • Cattle Complex Live cattle and feeder cattle futures prices are expected to open lower, following Globex market moves and giving in to pressure from the Goldman roll.
  • The Goldman roll may bring pressure on the nearby August contract while supporting deferred positions.
  • Meat demand issues continue to plague the cash market, making futures rallies seen as selling opportunities.
  • Traders may be watching outside markets like stocks and crude oil for influence on the market.

Statistics:

  • The Standard & Poor's Goldman Sachs Commodity Index is associated with the roll of August long positions into October.
  • The roll period will run through July 14.
  • Nearby July futures expiring on July 15 are expected to trade in a narrow range, tracking closely with cash prices.
  • Pork belly futures may trade flat to firm on possible followthrough buying.
  • Weaker fresh belly prices may temper gains and bring in some selling interest.
  • Cattle Complex Live cattle and feeder cattle futures prices are expected to open lower.
  • The Goldman roll may bring pressure on the nearby August contract.

Sources:

  • Dow Jones Commodities News via Comtex
  • Lester Aldrich, Dow Jones Newswires; 913-322-5179 lester.aldrich@dowjones.com
  • Curt Thacker, Dow Jones Newswires; 913-322-5178; curt.thacker@dowjones.com
  • Comtex SmarTrend Alert
  • Comtex News Network, Inc.
  • Standard & Poor's Goldman Sachs Commodity Index