In Live Cattle the Cart is Ahead of the Horse

Follow me on Twitter @denniscattle

Tuesday March 20, 2018


The obvious is that hog futures (and cattle futures) are worried about Trump picking a trade war with China. The not so obvious is what happens next. Our approach, accumulating calls, is certainly not profitable but its performing a lot better than being long futures. Given the dynamics of a pounding strong U.S. economy and continued strong outlook for pork exports, were expecting a bottom, a major low soon. U.S. pork exports to China/Hong Kong have been in decline, down 18% last year. The growth in pork exports has been in Central America with continued strong exports to Japan, Mexico and Canada. Thus, the market is likely grossly overdoing the China fear factor.


Fund liquidation appeared to be the central theme in the LC yesterday. Open interest dropped by 4,400 cars in the April with an increase in all other contracts. Total open interest declined by only 1,700 cars. Theres much more to the selling than funds liquidating length. Having said that, well be working orders to cover short calls on our hedged positions and even looking to cover a portion of short futures on another round of selling pressure. It appears the cart is well ahead of the horse at this time. A bounce, a hard bounce is likely.

For a free 30-day trial to the evening livestock wire please send an email to:

The risk of loss in trading futures and options on futures can be substantial. The author does not guarantee the accuracy of the above information, although it is believed that the sources are reliable and the information accurate. The author assumes no liability or responsibility for direct or indirect, special, consequential or incidental damages or for any other damages relating or arising out of any action taken as a result of any information or advice contained in this commentary. The author disclaims any express or implied liability or responsibility for any action taken, which is solely at the liability and responsibility of the user. In addition, the author of this piece currently trades for his own account and may have financial interest in the following derivative products: (corn, soybeans, soybean meal, soybean oil, lean hogs, live cattle, feeder cattle).