Hogs
Price action: June lean hog futures fell $0.775 to $98.75, near the session low. For the week, June hogs were up 12 1/2 cents.
5-day outlook: The lean hog futures market bears are in firm technical control amid a price downtrend firmly in place on the daily bar chart. That suggests the path of least resistance for prices will remain sideways to lower in the near term.
The latest CME lean hog index is down 26 cents to $90.48. Monday’s projected cash index price is down another 2 cents to $90.46. The national direct five-day rolling average cash hog price quote for today was $94.50. The noon report today showed pork cutout value up $0.90 at $97.45, led by gains in loins and ribs. Movement at midday was solid at 203.07 loads.
30-day outlook: Lean hog futures bulls have been spooked by the recent case of pseudorabies reported in a small facility in Iowa, which traced back to an outdoor herd in Texas with likely exposure to feral swine. Mexico this week banned some pork product imports due to the pseudorabies case in Iowa. Bulls continue to hope better substitution demand will occur for pork as retail beef prices remain historically elevated.
90-day outlook: A smaller U.S. breeding herd and declining slaughter levels into the second and third quarters of this year should provide a floor under cash hog and futures prices. Export 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. This week’s meeting between President Trump and China President Xi Jinping disappointing U.S. producers as no concrete details emerged on ag purchases, but with Trump and other administration officials saying China will buy “billions” of dollars worth of U.S. ag products.
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 futures rose $1.825 to $253.90, near the daily high. For the week, June cattle were up $5.00. May feeder cattle futures gained $3.45 to $361.45, nearer the daily high. For the week, May feeders were down $2.775.
5-day outlook: June live cattle futures closed at a technically bullish weekly high close today, suggesting some follow-through chart-based buying interest from the speculators early next week. Futures markets saw buying interest today as cash cattle prices continue to rise despite elevated beef prices at the meat counter. USDA at midday today reported active cash cattle trading this week, with steers averaging $262.77 and heifers $262.32. The agency earlier this week reported cash trading last week averaged $258.52. The noon report today showed wholesale boxed beef cutout values higher. Choice-grade was up $1.41 at $388.86, while Select-grade gained $1.62 to $390.62. Movement at midday was good at 76 loads. The Choice-Select spread at midday today was minus $1.76.
World Weather Inc. said that in the Northern Plains states livestock stress early next week could occur too as a result of the big temperature change from hot to cold. Also, some wet snow cannot be ruled.
30-day outlook: Still overall bullish technicals and supply and demand fundamentals continue to support buying interest in futures markets. Despite the gains in cash cattle prices recently , beef packer margins continue to be in the red, which is likely to limit slaughter levels in the near-term as packers look to keep cash trade steady to lower. If this trend persists, it could mean an increase in retail prices as grilling season demand picks up.
90-day outlook: Historically tight fed cattle supplies on feedlots will continue to provide underlying support to cash cattle, futures and beef prices, especially with the outdoor grilling season under way. A worrisome element for cattle markets and cattle producers remains retail gasoline prices that are well above $4.00 a gallon in most locations. However, with U.S. stock indexes at or near record highs, U.S. consumer confidence in the coming months could remain upbeat.
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.