Hogs
Price action: June lean hog futures fell $1.00 to $101.275, near mid-range and for the week down 62 1/2 cents.
5-day outlook: The lean hog futures market bulls fizzled to end the trading week, after showing some impressive but brief strength at mid-week. Today’s technically bearish weekly low close sets the table for follow-through, chart-based selling pressure early next week, as June lean hogs are in a price downtrend on the daily bar chart.
The latest CME lean hog index is up 10 cents to $91.41. Monday’s projected cash index price is down 11 cents to $91.30. The national direct five-day rolling average cash hog price quote for today was $92.26. The noon report today showed pork cutout value up $3.49 at $100.25, led by gains in all cuts. Movement at midday was good at 194.91 loads.
30-day outlook: Wholesale pork market fundamentals continue to lend support to futures, though cutout has not sprung higher in anticipation of seasonal better grilling demand. The CME lean hog index has turned weaker after posting a series of gains, though as seasonal slaughter starts to decline and demand potential increases, buyers could start stepping back into the picture in earnest.
90-day outlook: Historically high beef prices at the meat counter could provide better substitution demand for the more economical pork cuts at the meat counter in the coming months. On the export front, demand for U.S. pork has been less than robust. Improving relations between the U.S. and China in the coming months would likely mean better demand for U.S. pork from China. However, recent reports from China indicate that the nation is presently dealing with a glut of pork supplies.
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 needs covered through April in the cash market. You should also have corn-for-feed needs purchased through April. Be prepared to make additional purchases.
Cattle
Price action: June live cattle futures fell $1.00 to $253.00, near the daily low after hitting a contract and record high early on. For the week, June cattle were up $7.775. May feeder cattle futures fell $1.25 to $371.40, near the daily low and hit a contract high early on. For the week, May feeders were up $10.50.
5-day outlook: The live cattle and feeder cattle futures markets bulls had a very good trading week, amid sharply higher cash cattle trade that developed after mid-week. USDA at midday today reported active cash cattle trading so far this week, with steers averaging $255.02 and heifers $254.75. The agency earlier this week reported cash trading last week averaged $246.18. The noon report today showed wholesale boxed beef cutout values weaker. Choice-grade was down $0.24 at $389.28, while Select-grade fell $1.65 to $386.52. Movement at midday was light at 33 loads. The Choice-Select spread at midday today was plus $2.76.
30-day outlook: Supply fundamentals remain a key driver in the cattle markets. Dry conditions in the southern Plains threaten herd growth as grilling season demand ramps up. Meanwhile, cash fundamentals have improved notably after holding a sideways to lower tone in recent weeks. Packer margins have improved notably as a result but are still negative. Renewed concerns around New World screwworm have emerged as cases rise in Mexico, which casts a shadow over the reopening of the U.S.-Mexico border
90-day outlook: Historically tight fed cattle supplies on feedlots will continue to favor feedlot operators in the coming weeks, especially with the outdoor grilling season on the doorstep. A worrisome element for cattle market bulls and for cattle producers is retail gasoline prices that are around the $4.40-a-gallon level. If gasoline prices tick closer to $5.00, consumer confidence will be dented and that could translate into reduced demand for higher-priced beef cuts at the meat counter. However, with U.S. stock indexes at or near record highs, such indicates consumer confidence in the coming months could remain solid.
What to do: Cover corn-for-feed needs through April in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you have full coverage in cash through April. You have corn-for-feed needs covered through April as well. Be prepared to make additional purchases if value prices continue.