Meats Outlook - An Excerpt from CRB'S Futures Market Service

CATTLE—Dec live cattle prices are trading sideways within a 10-month 9-cent range. Bearish factors include (1) demand concerns after US Sep beef exports tumbled -20% y/y, and (2) +0.6% rise in the overall US feedlot herd as of Oct 1 y/y, the first increase in 19 months as cheaper feed prices prompt herd expansion. Bullish factors include (1) speculation that retailers were stocking up on beef ahead of the holiday season, and (2) optimism that the weak dollar will boost prospects for US beef exports. Large specs as of Nov 9 added to a large long position of 27,365. The Cattle on Feed report (Oct 16) was bearish as cattle on feed Oct 1 rose to 102% of the year-earlier level, while cattle placed on feed in Sep rose to 106% of the year-earlier level vs Aug’s 104%. The Sep Cold Storage report (Oct 22) was bullish with beef supplies in cold storage falling -4.5% y/y vs -4.8% y/y in Aug.

HOGS—Dec lean hog prices are holding just below their recent 3-1/2 month high. Bullish factors include (1) US Sep pork exports rising +3.8% y/y, and (2) the reduction in US hog breeding herds by US hog producers to 5.874 mln sows, the lowest since 1973. Bearish factors include (1) the surge in US pork production in Sep to 2.0 bln lbs, a record for the month, and (2) overall weak foreign demand (US pork exports from Jan-Sep -17% y/y). Large specs as of Nov 9 doubled their small long position to 6,751. The Sep Cold Storage report (Oct 22) was bearish with supplies in cold storage rising +1.1% y/y vs +5.5% y/y in  Aug. The quarterly Hogs & Pigs report (Sep 25) was bullish with a -2.3% y/y decline in the US hog inventory to 66.6 million hogs as of Sep 1.

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