Hogs
Price action: August lean hogs fell 32 1/2 cents to $106.775, nearer the session low.
Fundamental analysis: The lean hog futures market today saw some mild chart-based selling pressure, but losses were limited by sharp gains in the cattle futures markets. Weakening cash and pork market fundamentals recently have also limited buying interest in hog futures.
The latest CME lean hog index is down $1.18 to $108.33 as of July 3, the fifth straight daily decline. It appears the seasonal top was put in at $112.02. Wednesday’s projected cash price is down another $1.00 at $107.33. The national direct five-day rolling average cash hog price quote today is $111.43. The noon report showed pork cutout value up 27 cents at $113.76, featuring gains in bellies. Movement at midday was decent at 175.42 loads. Pork packer margins are now modestly in the red.
Technical analysis: Lean hog futures bulls have the overall near-term technical advantage but a price uptrend on the daily bar chart has been negated. The next upside price objective for the hog bulls is to close August prices above solid chart resistance at the contract high of $113.375. The next downside price objective for the bears is closing prices below solid technical support at $102.00. First resistance is seen at today’s high of $107.825 and then at $109.00. First support is seen at this week’s low of $105.50 and then at $105.00.
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 rose $4.075 to $219.975, near the daily high and hit a contract/record high. August feeder cattle rose $5.40 to $319.125, near the session high and also hit a contract/record high.
Fundamental analysis: The cattle futures bulls continue to flex their muscles amid a very strong resurgence from the June lows. Speculator buying interest was featured today, including would-be, top-picking short sellers that have been blown out and forced to cover this week. Recently improved trader/investor risk appetite in the general marketplace has also been friendly for the cattle and beef markets, suggesting still-strong consumer demand for beef in the coming weeks/months. Slumping corn futures prices also boosted the feeder cattle bulls.
Live cattle futures traders continue to narrow their discounts to the cash cattle market. Cash cattle trade averaged $229.43 last week. Many cash cattle sources that were projecting weaker cash prices this week are now thinking cash cattle trading may come in steady, as packer margins have significantly improved recently and are well into the black now.
The noon report today showed wholesale boxed beef values higher, with Choice-grade up $3.28 at $394.26. Select-grade rose $1.98 to $379.51. Movement at midday was 49 loads. The Choice-Select spread is presently $14.75.
Technical analysis: Live and feeder cattle futures bulls have the solid overall near-term technical advantage. The next upside price objective for the live cattle bulls is to close August futures above resistance at $225.00. The next downside technical objective for the bears is closing prices below solid technical support at $212.50. First resistance is seen at $221.00 and then at $222.00. First support is seen at $218.00 and then at today’s low of $216.075.
The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at $325.00. The next downside price objective for the bears is to close prices below solid technical support at $307.50. First resistance is seen at $320.00 and then at $321.00. First support is seen at $316.00 and then at today’s low of $314.05.
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.