Hogs
Price action: August lean hog futures fell $1.075 to $96.15, near the daily low and hit a six-month low today.
Fundamental analysis: The lean hog futures market saw more technical selling pressure today, and also felt spillover price pressure from sharp losses in the cattle futures markets. Near-term charts remain bearish as a price downtrend is in place on the daily bar chart.
The latest CME lean hog index is up 9 cents at $92.60. Tuesday’s projected cash index price is up another 3 cents at $92.63. The national direct five-day rolling average cash hog price quote today is $95.00. The noon report today showed pork cutout value down $0.42 at $100.76, led by losses in butts and picnics. Movement at midday was 154.87 loads.
Technical analysis: August lean hog futures bears have the solid overall near-term technical advantage. Prices are in a steep downtrend on the daily bar chart. The next upside price objective for the hog bulls is to close June futures prices above solid chart resistance at $102.50. The next downside price objective for the bears is closing prices below solid technical support at the November low of $93.675. First resistance is seen at today’s high of $99.00 and then at $100.00. First support is seen at $95.00 and then at $94.00.
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 have corn-for-feed and soymeal needs covered through July in the cash market. Be prepared to make purchases if value prices continue.
Cattle
Price action: August live cattle fell $4.925 to $236.725, near the daily low. August feeder cattle lost $3.20 to $350.70, nearer the daily low.
Fundamental analysis: The cattle futures markets traders on this day decided they were more concerned about the bearish aspects of New World screwworm on the U.S. cattle industry, following a second and third case being found in cattle in Texas. The NWS situation is still fluid and cattle futures markets may remain volatile. The bullish aspect of the situation is reduced cattle supplies coming from Mexico and possibly from the far southern U.S. The potentially cattle-price-bearish aspect of NWS is possible negative U.S. consumer psychology toward beef that could result from the flesh-eating parasite and the general news media hyping the situation.
Temps in the Northern Plains on Tuesday could reach 100 degrees and stress livestock in the region.
USDA at midday today reported last week’s average cash cattle trading price was $256.53—down 33 cents from last week’s average price. The noon report today showed wholesale boxed beef cutout values mixed. Choice-grade was down $0.67 at $392.03, while Select-grade gained $0.99 to $383.68. Movement at midday was 58 loads. The Choice-Select spread at midday today was plus $8.35.
Technical analysis: Live and feeder cattle futures still see price downtrends in place on their daily bar charts. The next upside price objective for the live cattle bulls is to close August futures above resistance at the contract high of $251.65. The next downside technical objective for the bears is closing prices below solid technical support at last week’s low of $233.975. First resistance is seen at $240.00 and then at today’s high of $243.25. First support is seen at $235.00 and then at $233.975.
The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at $363.00. The next downside price objective for the bears is to close prices below solid technical support at last week’s low of $335.95. First resistance is seen at $355.00 and then at last week’s high of $358.75. First support is seen at $348.00 and then at $344.275.
What to do: You have corn-for-feed and soymeal needs covered through July 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-for-feed and soymeal needs covered through July in the cash market. Be prepared to make purchases if value prices continue.