Hogs
Price action: August lean hog futures rose 50 cents to $108.70, nearer the daily high and for the week up $2.225.
5-day outlook: The lean hog futures bulls had a good week again this week, including a technically bullish weekly high close today, following their late-June, early-July swoon. Prices are starting to trend higher, which will also better tempt the speculative bulls to play the long side next week. Hog producers will be monitoring a heat wave over much of the eastern two-thirds of the U.S. next week, which will likely produce livestock stress.
30-day outlook: The cash hog and pork markets fundamental picture continues to improve, which should be able to support steady-to-higher prices the next few weeks. The latest CME lean hog index is up another 72 cents to $109.95. The national direct five-day rolling average cash hog price quote today is $113.53. The noon report today showed pork cutout value up $2.97 at $120.51, led by gains in loins, butts and picnics. Movement at midday was good at 211.51 loads.
90-day outlook: The major bull market runs in the cattle futures markets have been supporting buying interest in the hog futures markets. Higher beef prices at the meat counter have also supported better substitution demand for pork at the meat counter by thrifty consumers. However, the cattle markets’ bull runs are very long-in-the tooth, and when they do run out of gas, the hog futures market may begin to suffer, too. Also, hog slaughter levels start to pick up as summer winds down, right during the timeframe when outdoor grilling demand starts to decline. It’s likely the fate of the hog market in the next few months will depend on what cattle market prices do.
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 67 1/2 cents to $226.475 and nearer the daily high. For the week, August cattle rose $2.925. August feeder cattle futures gained $2.475 to $331.375, near the daily high and closed at a contract/record high close. On the week, August feeders gained $7.375.
5-day outlook: The cattle futures ended the week on a positive note after the markets hit contract/record highs this week. Technicals remain firmly bullish, which sets the stage for more chart-based buying interest from the speculators early next week. The large discount live cattle futures are trading to the cash market will continue to limit selling interest in futures.
Cash cattle trade picked up late this week at lower prices. USDA today reported the average trading price for steers so far this week is $231.50, with heifers averaging $230.84. Last week’s final cash cattle trading average price was $237.78. The noon report today showed lower boxed beef cutout values, with Choice grade down 63 cents at $367.46 and Select grade down $1.39 at $345.61. Movement at midday was decent at 70 loads. The Choice-Select spread is presently $21.85.
Cattle futures traders will also take direction from this afternoon’s monthly USDA Cattle-on-feed report that was expected to show cattle on feedlots of more than 1,000 head, as of July 1, at 99.2% of the level seen one year ago at the same time. Placements in June are seen at 98.0% of year-ago levels, with marketings in June seen at 96.4% from last year at the same time.
World Weather Inc. today said a high pressure ridge will gradually build and strengthen in the next five days as it moves from the southeastern U.S. to the central U.S. Heat will be increasing as a result, with drier-biased weather and this will stress livestock.
30-day outlook: There may be a few storm clouds brewing over the bullish cattle markets in the coming weeks. Peak outdoor grilling season is passing, packer margins that are well into the red will keep packers hesitant to bid up for cash cattle each week. Cattle slaughter levels typically start to climb at the end of summer. And veteran cattle market speculators know this is a very mature bull market run in the cattle futures that cannot last indefinitely.
90-day outlook: Macro-economic fundamentals still favor the cattle market bulls, which argues that cattle and beef prices can remain elevated in the coming months. The major U.S. stock indexes hit record highs this week, suggesting upbeat consumer attitudes that should continue to support better demand for beef at the meat counter. Trade deals between the U.S. and other countries are falling into place, which may make for better beef export demand, but will also keep general marketplace attitudes positive—and that’s an underlying positive element for the cattle and beef markets. President Trump said on his social media platform Thursday night that “other countries that refuse our magnificent beef are ON NOTICE.”
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.