- Livestock futures traded mixed on Monday as concerns about reduced meat demand from Hurricane Sandy weighed on markets. Cattle futures were steady to higher due to tight supplies while hog futures fell due to heavy supplies and storm impacts. - Last week's cattle slaughter was 4% lower than a year ago at 492,000 head while cow slaughter fell 6% to 149,000 head. The storm disrupted processing along the East Coast. - Hog slaughter was up 3.1% to 2.379 million head last week but supplies remain heavy, pressuring prices along with high freezer stocks and reduced demand from the hurricane.

1. Vol. 10, No. 210 / October 30, 2012
Market Comments WEEKLY STEER + HEIFER SLAUGHTER: 2012 vs. 2011
000 head
WEEKLY COW + BULL SLAUGHTER: 2012 vs. 2011
000 head
580.0 170.0
Livestock futures traded mixed on Monday, as mar- 560.0 160.0
2011
ket participants were focused on the impact that Hurricane
540.0
Sandy would have on short term meat demand. Cattle fu- 2011 150.0
est.
tures were steady to higher, in large part reflecting tight beef sup- 520.0
140.0
plies coming out of the weekend and the expectation that cattle 500.0
slaughter will remain well below year ago levels in the next few 130.0
weeks. Feedlots did not appear anxious to take initial bids and 480.0
est.
120.0
were asking around $128-129/cwt for fed cattle. Cow supplies also 460.0 2012
2012
remain well below year ago levels. The charts to the right illus- 440.0
110.0
trate the seasonal shift that takes place in Q4 with regard to cattle
100.0
slaughter. Normally we see a notable decline in the number of 420.0
feedlot cattle going to slaughter in Q4. On the other hand, cow 400.0 90.0
slaughter picks up as cow-calf operators send to market cows they JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
do not wish to carry over the winter months. The latest USDA data
showed that last week steer and heifer slaughter was about
WEEKLY BARROW + GILT SLAUGHTER: 2012 vs. 2011 WEEKLY SOW SLAUGHTER: 2012 vs. 2011
492,000 head, 4% lower than the same week a year ago. Cow and 000 head 000 head
bull slaughter for the same period was reported to be around 2,400 70.0
2012 est.
2012 est.
149,000 head, down 6% from last year. Market participants we 2,300
65.0
contacted indicated that there were some disruptions due to the
2,200
storm. Processors along the East Coast either operated with re- 60.0
duced hours or shut down completely. There was some talk last 2,100 2011
week that with the storm approaching, some processors would opt 2,000
55.0
to get deliveries early. It does not look that happened and for good 2011
1,900
reason. If a plant expects to be without power for possibly an ex- 50.0
tended period of time, it makes no sense to get deliveries at all, the 1,800
45.0
less raw material you have to deal with, the better. On Monday, 1,700
the main headache was trucking, as it was almost impossible to get 40.0
anything booked to go to the East Coast. States like Connecticut 1,600
completely shut down their highway systems, stranding truckers at 1,500 35.0
border fueling stations. It will take a few days to sort out the ef- JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC
fects of the disruption but chances are that the storm will have
some short term impact on meat protein demand. This is particu-
participants clearly are concerned that the recent storm will
larly the case at the foodservice level. Lost foot traffic and sales
make it more difficult to clean up the market. Hog slaughter last
will be hard to make up, especially in the current economic environ-
week was 2.379 million head, 3.1% larger than a year ago. Since
ment. As for retailers, the storm likely represents a shift in sales
September 1, hog slaughter has averaged about 3.4% above year
rather than lost sales altogether. Consumers will probably deplete
ago levels. Hog weights also have been trending higher, as they
home refrigerated stocks and some product may be thrown away.
seasonally do at this time of year, although they are below last
In any case, following such disasters there is a rush to the retail
year’s record pace. Pork production last week was again around
store to replenish home stocks, resulting in higher sales in the fol-
483 million pounds, 1.4% higher than last year. Seasonally
lowing weeks
higher pork supplies, heavy freezer stocks and now a monster
Lean hog futures, on the other hand, were down as much Hurricane affecting over 60 million consumers all have combined
as 110 points for the December contract and down 120 points for to pressure hog prices in the near term.
the February contract. Hog supplies remain heavy and market
The Daily Livestock Report is published by Steve Meyer and Len Steiner. To subscribe/unsubscribe visit www.dailylivestockreport.com.
Disclaimer: The Daily Livestock Report is intended solely for information purposes and is not to be construed, under any circumstances, by implication or otherwise, as an offer to sell or a solicitation to buy or trade any
commodities or securities whatsoever. Information is obtained from sources believed to be reliable, but is in no way guaranteed. No guarantee of any kind is implied or possible where projections of future conditions are
attempted. Futures trading is not suitable for all investors, and involves the risk of loss. Past results are no indication of future performance. Futures are a leveraged investment, and because only a percentage of a con-
tract’s value is require to trade, it is possible to lose more than the amount of money initially deposited for a futures position. Therefore, traders should only use funds that they can afford to lose without affecting their life-
style. And only a portion of those funds should be devoted to any one trade because a trader cannot expect to profit on every trade.
CME Group is the trademark of CME Group, Inc. The Globe logo, Globex® and CME® are trademarks of Chicago Mercantile Exchange, Inc. CBOT® is the trademark of the Board of Trade of the City of Chicago. NYMEX,
New York Mercantile Exchange, and ClearPort are trademarks of New York Mercantile Exchange. Inc. COMEX is a trademark of Commodity Exchange, Inc. Copyright © 2011 CME Group. All rights reserved.