Hogs
Price action: August lean hogs rose 22 1/2 cents to $107.35, nearer the daily high after hitting a two-week low early on. For the week, August hogs fell $1.35.
5-day outlook: The lean hog futures bulls this week lost the technical momentum they spent the last two weeks in July building. That means the speculative, chart-based sellers have been emboldened and may start to play their cards in stronger fashion next week. One key for price action in the hog futures market next week will be how the cattle futures markets fare, following the big sell-offs seen in the cattle futures markets on Thursday.
The latest CME lean hog index is down 14 cents to $110.37, ending a string of recent gains. Monday’s projected index price is down 11 cents to $110.26 (for July 31). The national direct five-day rolling average cash hog price quote today is $112.63. The noon report today showed pork cutout value up $3.44 at $117.44, led by gains in loins, picnics and bellies. Movement at midday was good at 212.55 loads.
30-day outlook: Hog slaughter levels start to pick up in late summer, at the same outdoor grilling season tapers off. It may be tough for the lean hog futures and fresh pork markets to make much upside price headway if such conditions prevail in the coming weeks.
90-day outlook: With beef prices at the meat counter at historically elevated levels and following today’s shaky U.S. employment report, consumer demand for beef may decline this fall if consumer confidence starts to weaken. Substitution demand for pork at the meat counter could come into play after the Labor Day holiday in early September, at which time the U.S. stock market has a history of stumbling. There were key technical developments in the U.S. stock indexes late this week that hint the indexes may have peaked. The S&P 500 and Nasdaq stock index futures both posted bearish “key reversals” down on the daily bar charts.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
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.
Cattle
Price action: August live cattle futures rose $2.35 to $230.125 and near the daily high. For the week, August cattle gained $3.65. August feeder cattle futures gained $3.20 to $334.575, near the daily high and for the week up $3.20.
5-day outlook: The live and feeder cattle futures bulls today were able to claw back some of Thursday’s strong losses. Key will be if the bulls can show some follow-through price strength early next week. USDA today reported active cash cattle trading, with steers averaging $242.69 and heifers averaging $242.07. Both levels are well above the average price fetched last week. USDA will release its official cash cattle trading price for this week on Monday near midday. The noon report today showed wholesale boxed beef cutout values mixed, with Choice-grade $2.83 at $364.15, while Select fell 77 cents to $340.60. Movement at midday was light at 43 loads. The Choice-Select spread is presently $23.55.
30-day outlook: The outdoor grilling season has now passed its peak, and with it seasonal cattle slaughter levels tend to start rising. With cattle futures prices still not that far below their recent record highs and with beef packers cutting in the red, the packers are going to be reluctant to raise their bids for cash cattle in such conditions. The cattle futures market bulls have shown keen resilience and surprising strength in recent months, to keep price uptrends in place. It appears the bulls are going to have to do the same again soon, to further extend the record-setting price runs. Would-be hedgers should beware. When futures markets are in rarified air, they are there for a reason. Top-pickers need to be precise on their timing, but are wrong more times than they are right.
90-day outlook: From a macro-economic perspective, this week was a mixed bag, as a good second-quarter U.S. gross domestic product report was offset by a surprisingly weak July jobs report. How the U.S. economic data report pendulum swings in the next few months will play an important role in consumer confidence and in turn consumer demand for beef at the meat counter. It’s important to point out that history shows the months of September and October can be unkind to the U.S. stock market, and the stock market has a significant impact on consumer confidence.
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.