Hogs
Advice: We advise livestock producers to extend corn-for-feed coverage by one month in the cash market through May.
Price action: June lean hog futures settled 12.5 cents lower at $100.15, near mid-range.
Fundamental outlook: Lean hog futures saw action on either side of unchanged today in consolidative trade. Consolidation is healthy for the market, especially considering June futures have climbed over $12.00 from the early April low, marching higher nearly every session. The underlying fundamentals fueling the recent rally have not really changed. The CME lean hog index is up another 37 cents to $86.08 as of April 21, the fourth consecutive daily gain. The preliminary calculation puts the index up another 67 cents to $86.75 tomorrow, with the internal metrics of the calculation pointing to likely sustained strength. That fits with bulls’ idea that the index has bottomed and will work higher into the summer months as slaughter runs fall and pork production hits its annual low mid-summer. Meanwhile, weakness in cutout likely weighed on futures a bit today, as cutout fell another 26 cents to $95.52 at midsession, as all cuts except butts and bellies posted losses on the day.
Technical outlook: June lean hog futures traded in a relatively tight range today before closing modestly lower. Bulls continue to maintain the near-term technical edge. Tentative support stems from the psychological $100.00 mark and is backed by support at $99.125, then the 100-day moving average at $97.80. Bulls are looking to tackle resistance at $100.675 then today’s high of $101.425 on a continuation higher.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: NEW ADVICE -- Extend corn-for-feed coverage by one month in the cash market through May. You also have all soymeal needs covered in the cash market through May.
Cattle
Advice: We advise livestock producers to extend corn-for-feed coverage by one month in the cash market through May.
Price action: June live cattle rose $1.825 to $208.10, a fresh contract high, while May feeders edged $1.425 higher to $288.35, a five-week high close.
Fundamental outlook: Cattle futures scored a fresh for-the-move high in early morning trade, ultimately wiping out the early April high to notch a new contract high. Easing trade tensions have generated an elevated risk appetite across the marketplace, with lingering bullish supply fundamentals stirring buyer interest as the upcoming grilling season should bode well for demand. Meanwhile, optimism around trade, especially with China, has eased some recessionary concerns amid improved export demand prospects.
Subdued slaughter numbers as of late, which have recently fallen to the lowest level since 2015, suggest cattle feeders have slowed turnover rates to a record low, sending slaughter weights higher as they attempt to take advantage of high crash prices by adding more pounds to carcasses. This has ultimately pushed carcass weights to record highs, eclipsing year-ago weights by 30 lbs.
In the noon report, Choice boxed beef rose 63 cents to $332.36, while Select slid $1.20 to $316.45, while movement totaled 62 loads.
Technical outlook: June live cattle extended to a new contract high close as bulls continue to firmly grasp the near-term technical advantage, though resistance remains at $208.225. A move above the area will find bulls then facing resistance at $290.675, which is backed by psychological resistance at $210.00. Conversely, initial support will continue to serve at today’s low of $206.50, which is backed by support at $204.825, $203.375 and $202.40.
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: NEW ADVICE -- Extend corn-for-feed coverage by one month in the cash market through May. You also have all soymeal needs covered in the cash market through May.