Hogs
Price action: June lean hogs rose 77 1/2 cents to $100.025, near the daily high.
Fundamental analysis: Trading in the lean hog futures market continues overall choppy and sideways. The pause in the cattle futures markets so far this week, after last week’s run to record highs, is also keeping the hog market bulls a bit more tentative. Risk-off attitudes in the general marketplace so far this week are also somewhat squelching hog bulls.
Cash and pork market fundamentals are improving, which helped the futures market bulls today. Reduced hog slaughter levels should continue to support cash and pork product prices into summer. The latest CME lean hog index is up another 20 cents to $91.46 as of May 16. Wednesday’s projected cash index price is up 39 more cents at $91.85. The national direct five-day rolling average cash hog price quote today is $93.81. The noon report today showed pork cutout fell 53 cents to $100.56, led by losses in loins and picnics. Movement at midday was decent at 170.29 loads.
Technical analysis: Lean hog futures bulls have the slight overall near-term technical advantage amid recent choppy trading. The next upside price objective for the hog bulls is to close June prices above solid chart resistance at the April high of $101.975. The next downside price objective for the bears is closing prices below solid technical support at the May low of $96.675. First resistance is seen at this week’s high of $100.225 and then at last week’s high of $101.60. First support is seen at today’s low of $98.525 and then at $97.00.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You should have all corn-for-feed and soymeal needs covered in the cash market through June.
Cattle
Price action: June live cattle futures climbed 20 cents to $213.175 and closed near mid-range. August feeder cattle inched 2.5 cents higher to $297.50.
Fundamental analysis: Live cattle futures saw modest gains for the third consecutive session as prices continue to trade in last Thursday’s range, still well off last week’s highs. Futures continue to trade at steep discounts to the cash market as traders continue to anticipate a downturn in the cash market. Futures trade will continue to be highly contingent on the cash market, though barring a significant downturn, near-term selling pressure should be limited. Last week, packers purchased a lot of cattle, stringing together a few weeks of large purchases. That could point to packers having short-term needs met, especially with the holiday-shortened week next week. Still, trade in the cash market this week is likely to weigh heavily on the market. Trade has been light thus far this week, with the only trade taking place so far being in Kansas at $219.00, about $1.00 lower than last week’s average for the area, but well below the five-area average.
Strength in wholesale beef continues to be impressive though it has not been enough to offset rising cash cattle prices, leaving cutting margins deep in the red. Cutout continued higher this morning, with Choice surging $5.63 to $360.44 while Select climbed $1.01 to $345.12.
Technical analysis: June live cattle futures continue to boast modest gains as prices rebound from last week’s rout. Bulls continue to maintain the near-term technical advantage and are ultimately looking to challenge last week’s for-the-move high close of $216.825, with additional resistance lying on the way at $215.00. Initial support comes in at $212.50 on a reversal back lower, with selling pressure below that mark targeting support at $211.175.
August feeder futures continue to trade in a tight, sideways range similar to fats. Bulls continue to maintain the overall near-term technical advantage. Psychological resistance stands at $300.00 with additional resistance at $298.625 on the way. Support lies at $295.825, the psychological $295.00 mark, then $293.50.
What to do: Get current with feed coverage. Carry all production risk in the cash market for now.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You should have all corn-for-feed and soymeal needs covered in the cash market through June.