The product market has turned and the live hog prices are following them.
Below is how the weekly product market changed for the week ending 7/28.
*Product Price Monday 7/31 Price Friday 8/4 Net Change
| Loins | 87.96 | 83.65 | (4.31) |
| Butts | 88.22 | 88.55 | .33 |
| Picnic | 63.60 | 60.68 | (2.92) |
| Rib | 112.24 | 116.79 | 4.55 |
| Ham | 74.48 | 70.06 | (4.42) |
| Belly | 212.85 | 202.94 | (9.91) |
| Carcass Cutout | 99.66 | 95.77 | (3.89) |
| * National Carcass Base Price | $79.40 | 79.82 | .42 |
| * National Live Price | $63.01 | 62.94 | (.07) |
**Estimated USDA Hog Slaughter Week ending 8/5/17 2250
Actual USDA Hog Slaughter Same Period Last year 2200
% change year over year +2.2%
As you can see, the carcass value lost 3.89 cwt. while the live price lost .07 cwt.
Live Hog Contract Monday 7/31 Friday 8/4 WTD Net change
August hogs 80.30 83.23 2.93
October Hogs 66.03 66.78 .75
December Hogs 60.50 61.45 .95
February Hogs 65.60 65.90 .30
Looking into next week:
- The product market was under pressure as you can see by the 3.89 cwt. loss on the carcass cutout for the week. As of this writing, there isn’t any let up as we look into next week.
- Swine Times has been cautioning the readers to pay particular attention to the bellies.
- The correction in price we have been looking for has finally started to happen, as evidenced by the $9.91 cwt. decrease in price this past week. What we need to be watching for now is the price to which they fall, week to week. They will be a very dominant factor to the pork carcass cutout for the next several weeks.
- Hams will also be under pressure, but not to the degree the bellies are. Swine Times looks for hams to drop 7 to 10 more dollars cwt.
- The retail cuts are still going to go some lower and packers will be looking to use the lower prices to capture export orders. Keep an eye out for export talk particularly to Korea and Japan.
- There will be even more pressure put on the product market when the packers start to add Saturday slaughters to their schedules. This is just around the corner.
How do we trade this?
- Continue to sell October hogs on rallies over 67.00, if they get there. There is still the potential for October hogs to go under $60.
- As we move closer to Labor Day, be prepared to start looking for a place to cover October hogs and get long. If the October futures go under $60.00, Swine Times recommends covering the shorts.
- Watch the cattle and broiler prices as they are going to add more competition to an already
- weak pork market.
*USDA National Hog and Pork summary
** Expressed in thousand head
Subscribe to The Cattleman’s Advisory
The Cattleman’s Advisory - The Cattleman’s Advisory is a newsletter designed for producers of cattle by a producer of cattle. All subscribers can expect a weekly update of the Fundamental and Technical conditions of the cattle markets, setting the table for the week ahead.
Livestock Futures and Options to Hedging
If you are interested in the livestock commodity futures industry but feel you could use more information to get started, then download this self-study guide to learn the fundamentals of futures trading and hedging. You will receive an incredibly detailed, step-by-step explanation of the life of a livestock futures contract, as well as what tools you will need to possibly realize your goals.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.