Hogs
Price action: June lean hog futures fell $0.625 to $101.05, near mid-range, hit a four-month low and for the week down $2.675.
5-day outlook: The lean hog futures market today saw another technically bearish weekly low close, which sets the market up for follow-through chart-based selling pressure from the speculators early next week. The sell off in the cattle futures markets late this week also limited buying interest in hog futures.
The latest CME lean hog index is up 6 cents to $90.66. Monday’s projected cash index price is down 15 cents at $90.51. The national direct five-day rolling average cash hog price quote for today is $69.80. The noon report today showed pork cutout value up $3.48 at $100.16, led by gains across the board. Movement at midday was good at 230.77 loads.
30-day outlook: The CME cash index appears to have stabilized ahead of outdoor grilling demand and waning seasonal slaughter levels. Plentiful pork supplies also have bulls on the sidelines, with both average hog and carcass weights having risen notably in recent weeks.
90-day outlook: Export demand for U.S. pork needs to improve for cash hog, fresh pork and futures prices to sustain near-term uptrends. Slightly improving relations between the U.S. and China could spur more demand for U.S. pork from China. However, recent reports out of China say that nation is presently flush with 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 $0.275 to $247.35, nearer the session high after hitting a two-week low early on. For the week, June cattle were down $1.85. May feeder cattle futures lost $1.825 to $365.275, nearer the daily high and hit a nearly three-week low early on. For the week, May feeders were down $7.075.
5-day outlook: The live cattle and feeder cattle futures markets saw technically bearish weekly low closes today, which may set the table for follow-through, chart-based selling and weak long liquidation early next week. However, the bulls can correctly argue today’s high-range closes indicate the bears may be short-term exhausted. Still, the near-term technical posture for both markets did deteriorate late this week.
USDA at midday today reported active cash cattle trading late this week, with steers averaging $248.08 and heifers $248.21. The agency earlier this week reported cash trading last week averaged $248.38. The noon report today showed wholesale boxed beef cutout values weaker. Choice-grade was down $0.35 at $381.22, while Select-grade fell $1.12 to $377.36. Movement at midday was good at 71 loads. The Choice-Select spread at midday today was plus $3.86.
30-day outlook: Tight fed cattle supplies will continue to favor feedlot operators in cash negotiations in the coming weeks, especially with the outdoor grilling season ramping up. The marketplace continues to await news regarding a partial opening of the southern border, which is likely to cash a shadow over feeders.
90-day outlook: Sales volumes of fed cattle have been strained in recent weeks, and ultimately yielded larger show lists and shortened packer inventories. Slaughter totals continue to trail year-ago despite the reopening of the JBS plant in Colorado amid deeply negative cutting margins.
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.