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China Largest Buyer of US Beef Last Week

LEAN HOGS:

Where there is smoke there is fire. Now, I have no idea how that applies to the hog market, but I just felt like saying it. Cash will be called lower as the greedy packer is consistent in expanding their processing margins. The carcass was higher. For today….who knows? My sources, however, continue to advise that hams and bellies remain tight and many retail pork cuts, in the middle of National Pork Month, are also in good shape. Weekly export sales were awful at 22,100 MT, down 34% from the 4-week average. Mexico was the largest buyer, booking 16,000 MT. China was absent. Shipments were 29,000 MT, down 4%. Hogs may have gotten away from us. We’ll see. No outlook for today and no new recommendations.

 LIVE CATTLE:

Weekly beef export sales were pegged at 15,600 MT, up 5% from the 4-week average. Guess what, China was the largest buyer of U.S. beef last week followed by Japan, South Korea and Mexico. Impressive stuff. Shipments were 15,700 MT, down 13% from the 4-week average. The negotiated volume of trade, through Tuesday, was 15k. The Wednesday trade was active so the volume of trade will jump substantially. Open interest in LC was down 942. So, it seems that much of the buying is still short covering. Eventually new players will enter the market, likely big time. OI in feeders fell 300 cars. Feeders sucked traders into the short side last week, creating a massive bear trap. IMO, both LC and FC are just getting started. This is the beginning of a long term and massive bull market. We are on board.

CORN AND SOYBEANS:

The Nov corn 560 calls are currently trading from 3 ¼ to 3 ½ cents. I’m recommending taking ownership of some of these to hold into expiration. IMO, there’s a good chance China will come in for a large amount of corn prior to expiration. It’s possible that Tuesday’s USDA report will be bullish. Soybean oil snapped back higher overnight after displaying early weakness. Wheat prices remain firm to higher with spring wheat pushing into new highs. The Dec CBOT wheat chart appears to be forming a bull flag. A close above 764 will signal a 60-cent rally, taking wheat prices toward an 825 target. It appears that Russia will impose export quotas starting in February to help fight food inflation. Food inflation, by the way, is now a global concern. Our positions are in place. We’re speculating that corn prices, wheat prices and soybean oil prices are headed higher.

  • Buy Nov corn 560 calls at 4 cents. (filled) Premium outlay is $200, expiration of Oct 22nd.  

The risk of loss in trading futures and options on futures can be substantial. The author does not guarantee the accuracy of the above information, although it is believed that the sources are reliable and the information accurate. The author assumes no liability or responsibility for direct or indirect, special, consequential or incidental damages or for any other damages relating or arising out of any action taken as a result of any information or advice contained in this commentary. The author disclaims any express or implied liability or responsibility for any action taken, which is solely at the liability and responsibility of the user. This report is a solicitation.  

Futures and options trading involve significant risk of loss and may not be suitable for everyone.  Therefore, carefully consider whether such trading is suitable for you in light of your financial condition.  The information and comments contained herein is provided by ADMIS and in no way should be construed to be information provided by ADM.  The author of this report did not have a financial interest in any of the contracts discussed in this report at the time the report was prepared.  The information provided is designed to assist in your analysis and evaluation of the futures and options markets.  However, any decisions you may make to buy, sell or hold a futures or options position on such research are entirely your own and not in any way deemed to be endorsed by or attributed to ADMIS. Copyright ADM Investor Services, Inc.

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