Hogs
Price action: February lean hog futures rose 35 cents to $84.525, near mid-range, hit a six-week high and for the week were up $2.25.
5-day outlook: Today’s technically bullish weekly high close and bullish near-term chart posture for lean hog futures sets the futures market up for more speculator buying interest early next week. The cash hog market has stabilized and has started to creep higher, which is also bullish for futures.
The latest CME lean hog index is up 41 cents to $82.57. Monday’s projected cash index price is up 23 cents to $82.80. The national direct five-day rolling average cash price today is $71.60. The noon report today showed pork cutout value down 30 cents to $98.54, led by losses in hams. Movement at midday was decent at 202.88 loads.
30-day outlook: Christmas holiday demand for hams is peaking and that has supported the cash hog market. Still historically elevated beef prices at the meat counter are also likely pushing more consumers to buy the less-expensive pork cuts. The USDA quarterly hogs and pigs report and monthly cold storage report should be coming out this month, which hog futures trades will closely examine.
90-day outlook: Seasonal factors suggest hog slaughter levels will decline into spring, which will be price-friendly for the cash hog and lean hog futures markets for the next few months.
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 February in the cash market. You are hand-to-mouth for corn-for-feed needs. Be prepared to make additional purchases.
Cattle
Price action: February live cattle futures fell $1.40 to $229.55, nearer the daily low. For the week, February live cattle rose $2.40. January feeder cattle futures closed down $4.30 at $339.10, near the daily low. For the week, January feeders were up 5 cents.
5-day outlook: The cattle futures markets today saw some routine profit-taking pressure from recent solid gains and after both markets hit six-week highs on Thursday. Solidly higher cash cattle trade this week should keep selling interest in cattle futures limited in the near term. Wintry weather in the Plains states has stressed livestock, including likely limited weight gains, which is also price-friendly for futures.
Active cash cattle trading late this week saw USDA today reporting steers fetched an average price of $229.78 and heifers $230.28. That is well up from last week’s average cash cattle trade reported by USDA at $221.21. The noon report today showed boxed beef cutout values mixed, with Choice-grade losing 85 cents to $357.26, while Select-grade rose $1.32 to $344.78. Movement at midday was decent at 89 loads. The Choice-Select spread is presently $12.48.
30-day outlook: Wholesale beef values weakened this week and product movement improved, with retailers taking full advantage as they ramp up purchases for Christmas features. Cattle slaughter levels have continued to increase of late, though packer margins have faded amid increased input costs and weaker box prices
90-day outlook: The Federal Reserve lowered interest rates this week and leaned surprisingly easy on its monetary policy and likely providing a boost to U.S. consumer confidence. That is good news for the cattle and beef markets. Consumer demand for beef at the meat counter remains robust despite elevated prices at the meat counter.
What to do: Cover soymeal needs through February 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 February. You are hand-to-mouth for corn-for-feed needs. Be prepared to make additional purchases if value prices continue.