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October 25th, 2010 
usmblogger Hog Market Commentary for 8-18-10
October hogs surged higher with active fund buying and settled near the high end of a large range with the entire range up from yesterday’s close. The surge in pork cut-out values to a new 2-year high late yesterday sparked aggressive fund and speculator buying to drive October hogs sharply higher in the early going. With packer profit margins already in the black and October hogs holding a discount to the cash market, traders see packers willing to pay up in the cash market for live inventory in the days just ahead and the outlook for higher cash hog markets ahead has supported futures. News of lower average weights and news that cash hogs were trading higher helped support. The lean hog index is at 81.77 and traders see the index moving higher into next week. Ideas that a 5% tariff on pork exports to Mexico will not have a significant impact on the export pace along with ideas that Russia will demand more pork and poultry in the months ahead added to the positive tone. Slaughter came in at 408,000 head.
8-18-10 - Cattle Market Report
The market pushed sharply higher in the session as continued strength in the beef market and expectations that feedlots will be willing to pay higher in the cash market this week helped support a rally to new contract highs for October cattle and to the highest level since late April. Traders have been a bit nervous that the market is overbought and that beef prices will slip once retailers are done booking Labor Day features. However, the jump in beef prices in the last few days combined with more new highs into the mid-session for beef sparked renewed strong buying from fund traders. Boxed-beef cut-out values at mid-session were up $1.30 to $158.46. Stressful weather for feedlot cattle in the past few weeks (which has kept feedlot weight-gains slow) has traders suspecting a tight supply of market ready cattle and a strong incentive by packers for live inventory to support higher cash cattle trade this week.
After reading the hog and cattle analysis, 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.
Andy Waldock circulates this blog. Andy Waldock is a financial advisor, analyst, broker, asset manager and traderfor Commodity & Derivative Advisors, located in Sandusky, Ohio. For that reason, Andy Waldock may have positions for himself, his customers, or his family in any commodity future market reviewed. The blog is meant for educational purposes and to develop a dialogue among those with an interest in the commodity future markets. The commodity markets may not be suitable for all investors due to the high degree of leverage. There is substantial risk in investing in commodity futures. If you are interested in reading other circulated 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.
The daily commentaries provide an analysis of the factors that influenced price activity, a recap of any reports released that day, a summary of each commodity’s traded price activity, and a look ahead at the schedule for the next day. Market commentaries for wheat, soybeans, corn, gold and silver are provided by CME Group. The information in the Market Commentaries was obtained from sources believed to be reliable, but we do not guarantee its accuracy. Neither the information nor any opinion expressed therein constitutes a solicitation of the purchase or sale of any futures or options contracts.
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