Hogs
Price action: June lean hog futures rose $2.45 to $100.875, nearer the daily high.
Fundamental analysis: The lean hog futures market saw short covering and perceived bargain hunting after hitting a multi-month low on Tuesday. Good follow-through buying on Thursday would begin to suggest a near-term market bottom is in place. The near-term technical posture for June hogs is still bearish as prices are still in a downtrend on the daily bar chart.
The latest CME lean hog index is up 7 cents at $90.48. Thursday’s projected cash index price is up 26 cents at $90.74. The national direct five-day rolling average cash hog price quote today is $95.04. The noon report today showed pork cutout value up $1.40 at $96.92, led by gains in loins and ribs. Movement at midday was good at 193.38 loads.
Technical analysis: June lean hog futures bears still have the overall near-term technical advantage. Prices are 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 $104.45. The next downside price objective for the bears is closing prices below solid technical support at this week’s low of $98.35. First resistance is seen at $102.00 and then at $103.00. First support is seen at $100.00 and then at $99.00.
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 and corn-for-feed needs covered in the cash market through May. Be prepared to make additional purchases.
Cattle
Price action: June live cattle rose $5.10 to $252.80, near the daily high. August feeder cattle rose $4.375 to $360.925, near the daily high and hit a six-week low early on.
Fundamental analysis: The cattle futures markets saw good corrective buying today following recent losses. The high-range closes today suggest the bears may now be exhausted. Modestly higher cash cattle prices fetched in active trading at mid-week were also bullish for futures. USDA at midday today reported good cash trading activity so far this week, with steers fetching an average price of $259.92 and heifers $259.53. Last week’s average cash cattle trade was $258.52, up $3.50 from the week prior. The noon report today showed wholesale boxed beef cutout values weaker. Choice-grade was down $0.75 at $389.98, while Select-grade lost $1.41 to $389.86. Movement at midday was decent at 68 loads. The Choice-Select spread at midday today was plus $0.12.
Hot temperatures in the southern Plains through this weekend will stress livestock.
Technical analysis: Cattle futures bulls have the overall near-term technical advantage but have faded a bit. A fledgling price downtrend is in place on the daily bar chart. 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 this week’s high of $253.00 and then at last week’s high of $254.675. First support is seen at today’s low of $248.05 and then at this week’s low of $245.475.
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 $350.00. First resistance is seen at this week’s high of $367.50 and then at $370.00. First support is seen at $356.00 and then at today’s low of $351.975.
What to do: Cover corn-for-feed and soymeal needs through May in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You have corn and soymeal for feed needs covered in the cash market through May. Be prepared to make additional purchases if value prices continue.