Hogs
Price action: August lean hog futures rose $0.70 to $102.85, nearer the daily high, hit a nine-week high and for the week up $1.20.
5-day outlook: The lean hog futures market saw more technical buying interest from the speculators today amid charts that are bullish as prices are in a solid uptrend on the daily bar chart. Today’s technically bullish weekly high close only adds to that bullish chart posture heading into futures trading next week.
The USDA noon pork showed cutout value was up $1.06 at $105.54, led by gains in all cuts. Movement at midday was 139.22 loads. The latest CME lean hog index is up 40 cents to $97.48. Monday’s projected CME index price is up 43 cents at $97.91. The national direct five-day rolling average cash hog price quote for today is $100.60.
30-day outlook: Lean hog futures have remained in a steady uptrend since early June, supported by strong gains in pork cutout values driven by seasonal domestic demand. Cash prices remain firm, with packer margins showing modest improvement. However, a seasonal increase in hog supplies into late summer and fall could cap upside. Traders will closely examine this afternoon’s USDA cold storage report for confirmation of tighter summer supplies.
90-day outlook: Hog and cattle futures prices have diverged recently as pork demand has held up compared to beef. Pork remains more affordable at the meat counter, likely supporting continued steady consumer interest in the coming months as high beef prices weigh on consumers, especially with gasoline prices on the rise again.
What to do: Get current with feed coverage.
Hedgers: You currently have all 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 futures rose $1.675 to $227.075, near mid-range and for the week up $2.65. August feeder cattle futures gained $1.55 to $345.325, nearer the daily low and for the week down 62 1/2 cents.
5-day outlook: The cattle futures markets today saw some follow-through buying from Thursday’s rebounds. Two sessions in a row of decent gains in the cattle futures markets, including today’s bullish weekly high close in August live cattle, are early clues the bears may finally be exhausted and market bottoms might be in place. Still, the futures market bulls are still timid amid falling cash cattle prices.
USDA at midday today reported active cash cattle trading, with steers averaging $230.37 and heifers $230.08. The agency Monday reported average cash cattle trading last week at $238.28. The noon report today showed mixed boxed beef prices, with Choice grade up $0.45 at $363.32 and Select grade down $0.64 at $348.11. Movement at midday was decent at 92 loads. The Choice-Select spread is presently plus $15.21.
USDA will release its monthly Cattle of Feed Report this afternoon, as well as Cold Storage and semiannual cattle inventory data. Click here for more pre-report details.
30-day outlook: Softening cash cattle prices and boxed beef values may continue to weigh on futures in the coming weeks, as fed cattle prices have declined in recent weeks amid seasonal summer demand weakness. Signs of demand destruction have triggered significant speculative liquidation, pushing futures to fresh near-term lows. Rising beef imports are also pressuring the futures market. Packer margins remain negative, which is likely to keep slaughter volumes in check.
90-day outlook: On the supply side, historically tight fed cattle supplies are still working in favor of the cash and futures markets bulls. We’ll get an update from USDA today on that front. The stock market has been wobbly recently and gasoline prices are on the rise and averaging above $4.00 a gallon again. These are potentially bearish elements for the demand side of the equation for beef demand at the meat counter. The New World screwworm threat and detected cases in the U.S. continue to creep up, which at some point, if cases continue to rise, may also psychologically damage consumer attitudes toward buying beef.
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.