Lean hog futures are testing resistance in the early electronic trade.

[Dennis Smith]

LEAN HOGS
Good morning. Lean hog futures closed mostly higher yesterday led by the Aug and Oct contracts. Today, in the early electronic trade, futures are trading higher and testing key resistance. I define important resistance in the July hogs in the 8060-8080 range. We’ll see if this level is taken out today. The cash hog market is called fully steady but I’d expect a firming trend in the cash market to develop moving forward. Supplies of butchers are tight as evidenced by yesterday’s short kill at only 393,000. I consider the long term pork fundamentals bullish and I’m expecting, eventually, a test of upper level resistance at 8350-8400. I’m trading accordingly with my spec clients.


LIVE CATTLE
Live cattle futures staged an impressive “turn around” yesterday. Futures volume was not real large and open interest was unchanged. Look for a choppy, two sided trade today as the trade evaluates the current situation and attempts to guess the next move in the cash steer market. Bids for cattle are posted at 91 cents. Should a steady cash market develop, say in the 92 to 92.5 level, that would likely support futures, in my opinion. The big story yesterday was the abrupt, unexpected turn around in the wholesale beef market. It’s my opinion the deferred contracts are too cheap relative to the cash market and relative to the tight beef fundamentals coming down the pipe.

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