Hogs
Price action: June lean hogs rose 80 cents to $99.10, near the daily high.
Fundamental analysis: Not a bad start to the U.S. holiday-shortened trading week for the lean hog futures bulls, as price action reversed early-session losses to close with moderate gains and score a technically bullish outside-day up.
Cash and wholesale pork market fundamentals remain sound. The CME lean hog index is up another 19 cents to $92.94 as of May 22. Wednesday cash index is projected up another 11 cents at $93.05. The national direct five-day rolling average cash hog price quote today is $95.58. The noon report today showed pork cutout value rose $2.91 to $104.37, led by gains in bellies. Movement at midday was good at 153.31 loads.
The USDA cold storage report last Friday showed U.S. pork stocks totaled 455.8 million lbs., up 46.3 million lbs. from March. That was more than double the five-year average increase of 21.7 million lbs. Some of that was due to a 12.8-million-lb. downward revision to March stocks. Still, pork stocks declined 43.5 million lbs. (8.7%) from April 2024 and 92.5 million lbs. (16.9%) from the five-year average.
Technical analysis: Bulls have the slight overall near-term technical advantage amid recent choppy trading. The next upside price objective for the hog bulls is to close June prices above solid chart resistance at the April high of $101.975. The next downside price objective for the bears is closing prices below solid technical support at the May low of $96.675. First resistance is seen at $100.00 and then at $101.60. First support is seen at today’s low of $97.75 and then at $96.675.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You have all corn-for-feed and soybean meal needs covered in the cash market through July.
Cattle
Price action: June live cattle futures fell 67.5 cents to $215.125 but closed nearer session highs. August feeders slid $2.225 and settled near mid-range.
Fundamental analysis: Cattle futures favored the downside today but ended the day well off of session lows. There was an unsubstantiated rumor that tripped up markets after the open that were debunked ahead of the close, leading to a bounce into afternoon trade. A delay of last week’s cash cattle average likely led to uncertainty and profit-taking as cattle futures continue to trade near contract highs. Last week, cash trade averaged $226.97, up 34 cents from the previous week and the fifth consecutive week averaging a record. Negotiations stalled last week, totaling just over a third of the prior week, indicating packers likely have their short-term needs met. That could weigh on negotiations again this week, but unless cash trade or futures turn sharply lower, feedlots are unlikely to lower asking prices any time soon. Last Friday’s Cattle on Feed report was fully neutral, providing little support today. Long-standing bull markets need to be fed and the current rally is long in the tooth, which could lead to additional profit-taking later this week, but discounts to the cash market are likely to keep drawdowns brief. Wholesale beef was mixed at mid-morning, with Choice cutout slipping $1.36 to $360.19 while Select firmed 15 cents to $351.47, narrowing the Choice/Select spread to $8.72. Movement was light at 49 loads. The feeder cattle index continues to see relative weakness and is down another 23 cents to $295.46.
Technical analysis: Cattle futures favored the downside today but bulls continue to maintain full control of the technical advantage. June live cattle bulls are ultimately targeting record highs at $218.625, while additional resistance comes in at $216.825. Support comes in at the psychological $215.00 mark, the 10-day moving average at $214.20, then today’s low of $212.50.
August feeder futures continue to trade largely sideways following the sharp breaks a couple weeks ago. Bulls maintain the technical advantage and are looking to overcome psychological resistance at $300.00. Additional resistance stands at today’s high of $301.20. Support comes in at $297.70 then the psychological $295.00 mark on continued sideways trade.
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 have all corn-for-feed and soybean meal needs covered in the cash market through July.