Hogs
Price action: June lean hog futures closed 35 cents lower at $99.00, nearer session lows.
Fundamental analysis: Lean hogs saw action on either side of unchanged today as cash fundamentals continue to give mixed signals to the marketplace. June lean hogs failed to garner much bullish momentum above the psychological $100.00 mark today as pork cutout continues to be an anchor on the market. After rising Friday, cutout turned lower again this morning, falling $1.13 to $97.25 at midsession as losses in butts and loins led cutout lower. The vast majority of price action continues to take place between $95.00 and $100.00 in recent months as poor export prospects weigh on a typical spring/summer rally in cutout which historically leads the cash index higher as well. The CME lean hog index is up another 12 cents to $89.69 as of May 1, marking the 12th consecutive daily gain, though recently, strength has somewhat subsided. The preliminary calculation puts the index up another 18 cents to $89.87 tomorrow.
Technical analysis: June lean hog futures struggled to break above psychological $100.00 resistance today. Bulls retain a modest technical advantage and are looking to close prices above the aforementioned mark, which is reinforced by resistance at the April 25 close at $101.15. Support comes in at $98.85, the 10-day moving average, which limited the downside today. Additional selling would find support at $97.70.
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 corn-for-feed needs covered in the cash market through May. You also have all soymeal needs covered in the cash market through May.
Cattle
Price action: June live cattle rose $2.55 to $213.65, nearer the daily high and hit a contract high. August feeder cattle rose $2.00 to $298.90, near the session high and hit a contract high. Nearby May feeder futures hit a record high today of $296.60.
Fundamental analysis: The cattle futures bulls continue to be fueled by solid cash and beef markets fundamentals. The recent improvement in risk appetite in the general marketplace has also benefited the cattle markets bulls. Focus this week is on the Federal Reserve’s Open Market Committee that begins Tuesday morning and ends Wednesday afternoon with a statement. Given the already-elevated cattle price levels, the cattle market bulls need to see consumer attitudes continue to improve. Such would be the case if the U.S. stock indexes continue to trend up in the near term.
Cash cattle prices last week reached a record high for a second straight week, averaging $220.97, which is up $4.65 from the week prior. We look for cash cattle trade this week to come in at least steady to higher. While packer cutting margins remain deep in the red, by more than $150.00, they are still having to bid up for cattle to ensure enough beef supplies to meet retailer demand amid reduced slaughter levels. The noon report today showed boxed beef values higher, with Choice grade up $2.89 at $345.79 and Select grade up $2.41 at $327.76. Movement was light at 30 loads. The Choice-Select spread is presently $18.03.
Technical analysis: Live and feeder cattle futures bulls have the strong overall near-term technical advantage. The next upside price objective for the live cattle bulls is to close June futures above resistance at $217.675, which is the record high, basis nearby futures. The next downside technical objective for the bears is closing prices below solid technical support at $207.725. First resistance is seen at $215.00 and then at $217.675. First support is seen at today’s low of $211.00 and then at $210.00.
The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at $310.00. The next downside price objective for the bears is to close prices below solid technical support at $287.50. First resistance is seen at $300.00 and then at $301.00. First support is seen at today’s low of $295.95 and then at $294.00.
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: You should have all corn-for-feed needs covered in the cash market through May. You also have all soymeal needs covered in the cash market through May.