Friday, Livestock Comments


Jerry Welch, Commodity Insite!
Call me at 406 -682 -5010
Ennis, Montana 59729

Follow me on twitter@commodityinsite


Below are the morning comments from my twice a day newsletter, Commodity Insite. The information was sent to my subscribers, brokerage clients and to those that recently bought my book, Haunted By Markets this morning about 6:41 a.m. Chicago time. Hope you find something of interest in my ramblings.

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livestock complex

In the entire critter complex yesterday, only two cattle contracts closed with a gain. Spot month October live cattle were up 5 points and December picked up 50 points. But February cattle were down 5 points and April slipped 35 points. However, feeder cattle were off 160 points. And the oinkers were slapped hard with December down an ugly 255 points. The day was bearish except for those two cattle contracts that somehow clawed their way to a higher close.

After the close, the hog kill came in at 491,000 head, 1,000 more than expected just about an all time high while pork cutout was down $1.44, showing further weakness of $.40 from the morning. The cattle kill was 111,000 head, 3,000 less than expected with cutout down $.17, a decline of $.68 from earlier. The data regarding supply (slaughter) and demand (cutout values) after the close were by any measure neutral to best for cattle and hog futures.

I view the cattle kill as bearish since there were 3,000 head less killed ( due to the problems with Cargill plant in Kansas yesterday) than expected. Those 3,000 head are out there but not marketed on a timely manner. That means somewhere the down the road there is another 3,000 head to be killed. Much more of that and the cattle futures market will suffer.

Because, "feeders are the leaders consider the following; The last time November feeders closed where they did yesterday at, $144.32 was on October 9. On December live cattle closed at $111.17 compared to where they closed yesterday of $114.33. In other words, if December cattle were to "catch up" to November feeders, December cattle need to drop $3.15. In my view, December live cattle are too pricey or November feeders too cheap.

I believe December cattle are too pricey. As a new trade, therefore, I suggest selling (1) December live cattle at $114.25 or higher. The market closed yesterday at $114.32. If filled, no stop for now. But on a hard break I will be suggesting to buy February cattle against shorts in December cattle. And what else is new you ask?

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With only a few minutes to trade in the critter complex today, it is a sea of red ink. The oinkers are down 185 and 320 off the high. Feeder cattle basis November are off 200 points and December cattle are in the ugly by 115 and trading at $113.22. It is not a good day! And on a Friday, no less.



There is no substitute for timely and accurate information. Drop me a line at commodityinsite1@gmail.com if you wish to know more about my twice a day newsletter. Or, call me at 406 682 5010. I would enjoy hearing from you.


One last thought. Historically, October is one of the most bearish months of the year for stocks and at times commodities. A poor close on a Friday, in October could, may, or should lead to much lower values come Monday. This is October and this is a Friday.


And while the critter complex is wallowing in a sea of bright red ink, the Dow Jones is 194 points lower. Gulp!


There is no substitute for timely and accurate information!


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