Higher open interest was reported in cattle, feeders and hogs.

[Dennis Smith]

LEAN HOGS
Good morning. Lean hog futures surged higher on Monday with the market opening about 100 point higher and finishing from 150 to 200 higher. The board posted fresh contract highs in all contracts. Monday’s volume was reported at 32,377 with open interest increasing by 6,098. There was a substantial build in open interest in the summer and fall contracts. Cash hog prices yesterday were sharply higher and they’re expected to trade firm to higher again today. The closing pork report showed the cutout up .53 at 75.02. While the board, even the April, is trading substantially higher than the cash market, there’s no indication yet that the post-report move has run its course. We are looking to liquidate April hog 72 calls which we purchased prior to the hog & pig report. As the board works higher in the summer contracts my hedgers are showing increased interest in securing puts to establish a price floor under expected production. At this moment, there’s no sign of a top.


LIVE CATTLE
Live cattle futures closed higher across the board on Monday with the feeder cattle market exploding into fresh contract highs. Similar to the hogs, we saw good volume of trade and rising open interest in the beef sector resulting from yesterday’s action. Live cattle volume was reported at over 66,000 with total open interest increasing by 6,157. Feeder cattle open interest jumped by 801 contracts on their push into contract highs. The trade is expecting another round of cash strength this week in the direct steer trade. There were reports of bids in NE at 157 which would be up $1.00 from the 156 paid last week. There were no bids reported yet in the S. Plains. The wholesale beef continues to work higher with the choice cutout up 1.22 at 164.23. Tight supplies of beef continue to be the feature. Box movement remains slow and reluctant but that’s been the case for three weeks now. There’s no indication that the up-trend is going to change at this time. Yesterday’s trade above 9420 in the June was, in my opinion, a bullish indication that this market is likely ready to challenge the contract highs. I’m waiting for some clear sign of a top before moving into the June options for my hedge clients. My aggressive spec traders are now long the board. We’re also holding the Aug/Jun bear spreads.

If you would like a free trial to my evening livestock wire give me a call or send me an email. dennis.smith@archerfinancials.com 877.377.7905