Hogs
Price action: August lean hogs fell $2.10 to $110.95, near the session low.
Fundamental analysis: The hog futures market today saw profit-taking pressure from the speculators after prices last week hit a contract high. However, still-strong cash hog and pork market fundamentals and a still-solid technical posture will likely limit the downside in futures in the near term.
The latest CME lean hog index is up 77 cents to $109.55 as of June 20. Wednesday’s index is projected up another 89 cents to $110.44. The national direct five-day rolling average cash hog price quote today is $113.11. The noon report today showed pork cutout value dipped 19 cents to $122.92, with hams leading on the downside. Movement at midday was decent at 151.68 loads. Pork packer cutting margins are reported well in the black at present.
Technical analysis: Lean hog futures bulls still have the solid overall near-term technical advantage. Prices are in a 2.5-month-old uptrend on the daily bar chart. The next upside price objective for the hog bulls is to close August prices above solid chart resistance at $115.00. The next downside price objective for the bears is closing prices below solid technical support at $106.00. First resistance is seen at the contract high of $113.375 and then at $114.00. First support is seen at $110.00 and then at $108.45.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You have all of your soymeal and corn-for-feed needs covered in the cash market through July. You also have half of your soymeal needs for August, September and October covered in cash.
Cattle
Price action: August live cattle futures inched 17.50 cents higher to $209.55, while August feeder cattle futures slid 55 cents to $302.25.
Fundamental analysis: Cattle futures saw a volatile day of trade, caught between technical support and resistance. Bulls are struggling to garner much bullish momentum following the recent downturn in the cash cattle market. Bears seemingly anticipated the move as the August future peaked on June 9. The vindication following last week’s downturn in the cash market likely gave bears confidence to push prices even lower. Additional weakness in the cash cattle market seems likely as packers have the upper hand in negotiations. Packer margins remain deep in the red, reported at -$25.35 this morning by Hedgersedge, so packers are likely to take full advantage of the recent pullback and seek to continue bearish momentum. Beef trade this morning was mixed, as Choice cutout firmed $1.13 to $391.35, while Select cutout slid $2.12 to $380.98. Movement was light at 41 loads.
Technical analysis: Bears maintain a slight technical advantage in August live cattle futures. Bears defended downtrend resistance at $212.00 today, which stands as key resistance. Strength above that mark would eye last Friday’s high of $213.875. Support persists at $209.25, the 40-day moving average, while additional selling pressure eyes yesterday’s low of $208.10.
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 have all of your soymeal and corn-for-feed needs covered in the cash market through July. You also have half of your soymeal needs for August, September and October covered in cash.