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LEAN HOGS:
Cash hog prices were up more than $2.00 yesterday with the top price paid at $85.50. This is higher than where the April contract settled yesterday. The carcass was up $2.50. The vaccination process is now, suddenly, moving faster than expected. The rapid manufacture of the J&J vaccine and quick distribution has allowed the Biden Administration to project all adults will have access to a shot by the end of May. Economists are projecting 2nd quarter GDP growth at more than 10%. What will this do to meat demand? What will this do to hog prices as demand rises and production declines? Speaking of demand, multiple sources continue to confirm that ASF continues to spread in China. The Chinese Premier stated just yesterday that China must ensure national food security. In face of these comments April futures closed 240 lower. They closed lower in the face of confirmation that ASF is spreading in China, in the face of higher cash and in face of a sharply higher carcass value. We’re now recommending buying time, going out to the Oct LH calls. Hog & pig comes out March 25th, it should confirm contraction.
LIVE CATTLE:
The FCE will have 1800 head consigned for sale at 10:00 this morning. Will they bring steady money…a lousy $1.14? The beef is now headed lower with the choice down $4.35 yesterday at $234.68. Look for the choice to approach $220 before stabilizing. Not sure if this means lower cash steer trade or not. Packer margins remain record high at just shy of $400 per animal. What will GDP growth of over 10% in the second quarter do to beef demand? It certainly won’t hurt. I’m not bearish but just not enthusiastic about assuming new long positions in the live cattle at this time. We’re holding a few bullish April option positions and a large number of bullish Oct positions. However, we’ve recently traded our long Oct futures positions for cash. Did feeders put in a near term low yesterday? I wonder.
If you would like a free 30-day trial to the evening livestock wire that includes a morning livestock report and a midday pork and beef update, send an email to: dennis.smith@archerfinancials.com
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