Hogs
Price action: October lean hog futures fell 25 cents to $90.675 and near mid-range. For the week, October hogs rose 62 1/2 cents.
5-day outlook: The lean hog futures market paused today, with buying interest limited by the big sell offs in live and feeder cattle futures markets today. Next week’s price action in hog futures will likely be impacted at least to some degree by price action in cattle futures.
The latest CME lean hog index is up 50 cents to $110.10 as of Aug. 6, reversing from recent weakness. Monday’s projected hog index price (for Aug. 7) is up 15 cents at $110.25. The national direct five-day rolling average cash hog quote today is $111.54. The noon report from Omaha showed pork cutout value up $1.76 at $117.28, led by bellies and butts. Movement at midday was 132.38 loads.
30-day outlook: Hog slaughter levels start to pick up in late summer, at the same outdoor grilling season tapers off. It may be tough for the lean hog futures, cash hogs and fresh pork markets to make much upside price headway if such conditions prevail in the coming weeks.
90-day outlook: Big discounts in deferred lean hog futures, compared to the cash hog index, are sending a bearish signal to hog traders, who may be thinking about the possibility of an expanding U.S. hog herd following a bumper corn crop to be harvested this fall. There is also the bearish specter of less export demand for U.S. pork from China, as those two nations grapple to forge a trade deal.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You should have all your soymeal needs covered through September in the cash market, with half coverage for October, November and December. For corn, you now have all needs through October covered in the cash market.
Cattle
Price action: August live cattle futures fell $6.20 to $232.55, near the daily low and on the week up $4.30. August feeder cattle futures today lost $9.25 to $339.40, near the session low and for the week rose $4.825.
5-day outlook: Heavy profit-taking pressure hit the cattle futures markets hard today. Bulls need to step up on Monday, as good follow-through selling pressure would begin to suggest major market tops are finally in place for the record-setting bull runs in live and feeder cattle futures markets.
Cash cattle trading activity picked up today, with USDA reporting steers fetching an average price of $239.26 and heifers averaging $240.27. Last week’s average cash cattle trading price was at a record high of $243.17. The noon report today showed Choice grade boxed beef cutout value down $1.16 to $377.78. Select grade rose 96 cents to $354.71. Movement at midday was 76 loads. The Choice-Select spread is presently $23.07.
Widespread extreme heat in the Plains states will impact the region today with some daytime high temperatures as high as 106 to 109 degrees. This will lead to more livestock stress. After today, though, cooler weather with greater rainfall will arrive which will help keep overall concern for the region quite low. There is some possibility of extreme heat returning in the second week of the outlook, according to World Weather.
30-day outlook: Today’s strong selling pressure has the cattle futures market bulls spooked, especially as peak outdoor grilling season will continue to wind down into late summer. Cattle slaughter levels also typically start to increase in August. Bulls are hoping wholesale beef values will remain elevated as retailers build inventories for the Labor Day holiday features..
90-day outlook: History shows the months of September and October can be rocky for the U.S. stock market. If such is the case this year, it will be difficult for the cattle and beef markets to remain at elevated price levels. Consumer confidence is an important element for grocery shoppers deciding whether to buy the more expensive cuts of beef at the meat counter. If the stock and financial markets sail through September and October with no major headwinds, then consumer demand for beef would not likely be significantly dented.
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.