Hogs
Price action: June lean hog futures fell $1.525 to $99.75, near the daily low and hit a 4.5-month low.
Fundamental analysis: The lean hog futures market saw more technical selling pressure today as the near-term chart posture for June hogs has deteriorated. Prices are in a downtrend on the daily bar chart. Selling in the cattle futures markets today also limited buying interest in hog futures.
The latest CME lean hog index is down 11 cents at $91.30. Tuesday’s projected cash index price is down 27 cents at $91.03. The national direct five-day rolling average cash hog price quote today is $92.74. The noon report today showed pork cutout value up $0.35 at $97.94, led by losses in butts. Movement at midday was 148.31 loads.
Technical analysis: June lean hog futures bears have the overall near-term technical advantage. Prices are back in a downtrend on the daily bar chart. The next upside price objective for the hog bulls is to close June futures prices above solid chart resistance at $105.00. The next downside price objective for the bears is closing prices below solid technical support at $100.00. First resistance is seen at today’s high of $101.95 and then at $103.00. First support is seen at today’s low of $99.675 and then at $98.00.
What to do: Get current with feed coverage.
Hedgers: You have 50% of Q2 production hedged with all remaining risk in the cash market.
Feed needs: You should have all your soymeal needs hand-to-mouth. You should also have corn-for-feed needs hand-to-mouth. Be prepared to make additional purchases.
Cattle
Price action: June live cattle fell $1.25 to $251.75, nearer the daily high. August feeder cattle lost $4.80 to $366.60, nearer the daily low.
Fundamental analysis: The cattle futures markets saw what is so far routine profit-taking pressure from recent solid gains. Supply and demand fundamentals are still bullish, as are the technical postures for both markets. Last week’s strong gains in the cash cattle market will limit any more selling pressure in futures. USDA at midday today reported the average cash cattle trading price at $255.02. That’s $8.84 above the prior week’s average cash cattle price. The noon report today showed wholesale boxed beef cutout values higher. Choice-grade was up $2.54 at $391.65, while Select-grade gained $1.83 at $388.88. Movement at midday was 51 loads. The Choice-Select spread at midday today was plus $2.77.
Technical analysis: Cattle futures markets bulls have the solid overall near-term technical advantages. The next upside price objective for the live cattle bulls is to close June futures above resistance at the contract high of $256.625. The next downside technical objective for the bears is closing prices below solid technical support at $240.925. First resistance is seen at today’s high of $253.325 and then at $255.00. First support is seen at today’s low of $249.40 and then at $247.50.
Feeder cattle bulls are a bit worried that a bearish double-top reversal pattern could be forming on the daily bar chart. The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at the contract high of $379.45. The next downside price objective for the bears is to close prices below solid technical support at the April low of $354.65. First resistance is seen at $370.00 and then at today’s high of $372.525. First support is seen at today’s low of $364.00 and then at $360.00.
What to do: You are hand to mouth for corn for feed needs. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you are hand to mouth for feed needs. You have corn-for-feed needs in the cash market as well. Be prepared to make additional purchases if value prices continue.