Hogs
Advice: We advise livestock producers to extend corn-for-feed and soymeal coverage another month each in the cash market through June.
Price action: June lean hog futures closed a quarter lower at $97.325 and nearer session lows.
Fundamental analysis: Lean hog futures saw action on either side of unchanged today as prices continue to consolidate on the daily bar chart. The range since the April high continues to tighten exemplifying the uncertain nature surrounding the hog market as cash fundamentals continue to chop. After rising 26 cents to $90.13 as of May 5, the preliminary calculation puts the CME lean hog index just 3 cents higher to $90.16 tomorrow. The negotiated market traded lower over the past day despite showing strong gains earlier this week. Negotiated totals still make up a fairly small portion of trade taking place, though losses in that side of the market are quickly bleeding into the market as a whole. The index has struggled to diverge from wholesale pork prices in recent weeks. Pork cutout continues to trade sideways as uncertainty regarding trade continues to weigh heavily on the marketplace. Cutout is near the lower end of the range that has capped price action for two months. This morning, cutout rose 15 cents to $95.85, while movement was strong at 213.31 loads. Gains in butts and loins helped boost cutout in early trade.
Technical analysis: June lean hog futures continue to trade in a relatively tight range following the downturn in late April. Prices are likely to see a resurgence of buying or increase in selling pressure in the next couple of days. Bulls are seeking to overcome resistance at $98.10 on a bounce, which is reinforced by resistance at the 10-day moving average at $98.40, then $100.00. Support stems from yesterday’s low of $97.05 on continued selling pressure, which sees little backing until support at $95.50.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: NEW ADVICE -- Extend corn-for-feed and soymeal coverage another month each in the cash market through June.
Cattle
Advice: We advise livestock producers to extend corn-for-feed and soymeal coverage another month each in the cash market through June.
Price action: June live cattle closed $1.15 lower at $212.525; a mid-range close, while August feeders fell 60 cents to $298.60.
Fundamental analysis: Cattle futures put it in reverse after posting new all-time highs on Tuesday, though there is no cause for alarm given recent technically overbought conditions. Similar to last week’s modest pullback, today’s decline is likely a healthy correction or pause as traders wait for cash trade to develop a bit more in the wake of record cash trade the past two weeks. Despite higher prices, packers purchased the largest total of cattle this year last week, bringing some pause around the direction of cash trade this week. However, initial trade occurred in the Southern Plains at steady/firmer prices, and several feedlots were holding out for even stronger prices. Moreover, fresh contracted supplies at the flip of the calendar could also inhibit cash trade this week as well.
Regardless, supply fundamentals continue to embolden bulls as the official start to the grilling season kicks off during the fast-approaching Memorial Day weekend. Moreover, solid technical support will certainly lend complementary near-term support.
Wholesale beef values continue to hold steady, with the noon report showing Choice up $1.43 to $346.10 while Select rose 94 cents to $333.91. Movement totaled 67 loads.
Technical analysis: June live cattle bulls continue to firmly grasp the near-term technical advantage with today’s correction indicative of a healthy market. However, resistance will continue to serve at this week’s high of $214.325, with a move above the level stirring a battle at $214.92, then at $215.66. Meanwhile, initial support will remain at the 10-day moving average, currently trading at $210.51, which is backed by the 20-, 40- and 100-day moving averages.
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: NEW ADVICE -- Extend corn-for-feed and soymeal coverage another month each in the cash market through June.