Tim Hughes’s weekly newsletter, Dry Heat, summarizes the week’s latest activities and potential opportunities in the markets that he follows. His focus is primarily on the agricultural sector - cattle and grain futures. Contact Mr. Hughes at (602) 859-4100
Timothy Hughes firstname.lastname@example.org
6/28/13 General Comments
Cattle: June cattle traded down the limit near the close, while the cash fat cattle market traded at $120 in the south. There were reports of $121-$122 in the north. Cattlemen had been asking $122-$123 and packers had been bidding $118 and we ended up at steady money. Feeder prices gained strength with corn market weakness in the deferred contracts. Holiday shortened week this coming week and I don’t expect much cash trade. The packers have enough inventory for the holiday weekend and I don’t expect aggressive buy from them.
Hogs: The U.S. quarterly inventory of all hogs and pigs as of June 1, 2013 was 66.6 million. That number was down a little compared to the same period a year ago, but up 2% from March 1 of this year. The breeding inventory was up slightly from last year at this time and up 1% from the previous quarter. After the run up in prices recently, I am expecting a correction in the hog market within the next two weeks.
Grain: The USDA’s quarterly report lived up to it’s reputation for causing volatility. Seven of the prior nine reports caused a limit move, though today’s report didn’t cause that to happen, it was still a surprise to many investors who had expected smaller planted corn acreage because of a wet spring. Corn acreage was at a 77 year high of 97.4 million acres, well above the average estimate of 95.3 million acres. Farmers also planted record soybean acreage of 77.7million acres. The positive figures of the report were the stocks of corn and beans. Corn stocks in all positions were down 12% on June 1st compared to a year ago and beans stored in all positions were down 35% on June 1st compared to a year ago. Old crop corn closed up 12 cents and new crop corn closed down 27.5 cents. Old crop beans close 16 cents higher and new crop closed down 23.25 cents. It is still a long way to harvest and if I were a cattle feeder, I would be looking at the break in new crop corn prices, especially below $5.00/bu. as an opportunity to cover long term feeding requirements.
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