Hogs
Price action: October lean hogs rose $2.025 to $93.425, near the daily high and hit a six-week high.
Fundamental analysis: The lean hog futures market saw good technical buying featured today, and were also supported by new contract highs scored in the live and feeder cattle futures markets.
Cash hog and pork market fundamentals are slipping a bit, which has the hog futures bulls a bit worried about extending the recent gains. The latest CME lean hog index is down 57 cents to $107.27 as of August 22. Wednesday’s projected CME index price is down 41 cents at $106.86.
The national direct five-day rolling average cash hog price quote today is $108.71. The noon report today showed pork cutout value down 22 cents to $113.95, led by losses in picnics. Movement at midday was decent at 175.23 loads.
Technical analysis: Lean hog futures bulls have the overall near-term technical advantage and gained more power today. A choppy price uptrend is in place on the daily bar chart. The next upside price objective for the hog bulls is to close October futures prices above solid chart resistance at the August high of $93.275. The next downside price objective for the bears is closing prices below solid technical support at the August low of $87.925. First resistance is seen at $93.275 and then at $94.00. First support is seen at today’s low of $91.375 and then at $90.00.
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 your soymeal needs covered through September in the cash market, with half coverage for October, November and December. For corn, you now have all needs through October covered in the cash market.
Cattle
Price action: October live cattle rose $1.375 to $238.20, near the daily high and set a contract high. September feeder cattle rose $3.15 to $365.05, nearer the daily high and hit a contract/record high.
Fundamental analysis: The very mature bull market run in cattle futures continues to be extended, amid solid cash market fundamentals and no strong, early technical clues that market tops are close at hand.
USDA Monday reported cash cattle prices traded at an average of $244.25, up from $242.01 the week prior. Packers continue to bid up for historically short feedlot supplies, amid still-strong consumer demand for beef at the meat counter. The noon report today showed cutout values soaring, with Choice grade up $6.48 to $414.97 and Select grade up $6.84 to $392.22. Movement at midday was 57 loads. The Choice-Select spread is presently $22.75.
Technical analysis: Live and feeder cattle futures bulls have the solid overall near-term technical advantage. Prices are in a two-month-old uptrend on the daily bar chart. The next upside price objective for the live cattle bulls is to close October futures above resistance at $245.00. The next downside technical objective for the bears is closing prices below solid technical support at $230.00. First resistance is seen at today’s contract high of $238.45 and then at $240.00. First support is seen at $236.00 and then at today’s low of $233.525.
The next upside price objective for the feeder bulls is to close September futures prices above technical resistance at $370.00. The next downside price objective for the bears is to close prices below solid technical support at $350.00. First resistance is seen at the contract high of $365.675 and then at $367.50. First support is seen at today’s low of $362.65 and then at $360.00.
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: For soymeal, you have full coverage in cash through July, with half of your needs for August, September, October, November and December covered in cash. For corn, you have all needs through August covered in the cash market, with half of your needs for September and October covered in cash.