Hogs
Price action: February lean hog futures rose 37 1/2 cents to $84.50, nearer the session high, hit a seven-week high and for the week down 2 1/2 cents.
5-day outlook: The bullish near-term chart posture for lean hog futures and recently rebounding cash hog market set the futures market up for some more speculator buying interest early next week.
The latest CME lean hog index is up 1 cent to $83.88. Monday’s projected cash index price is down 15 cents to $83.73. The national direct five-day rolling average cash price today is $70.17. The noon report today showed pork cutout value up $2.92 to $100.35, led by gains in bellies and hams. Movement at midday was 191.72 loads.
Hog traders are awaiting the quarterly USDA hogs and pigs report next Tuesday afternoon, which is expected to show a decline in inventories and kept for breeding numbers.
30-day outlook: Christmas holiday demand for hams has peaked, which has supported the cash hog market the past few weeks. Still historically elevated beef prices at the meat counter are also likely to continue to move more consumers to purchase less-expensive pork cuts at the meat counter.
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 should also have corn-for-feed needs purchased through February. Be prepared to make additional purchases.
Cattle
Price action: February live cattle futures rose $2.40 to $230.80, nearer the daily high and hit a seven-week high. For the week, February live cattle rose $1.25. January feeder cattle futures gained $5.325 to $345.60, nearer the daily high and hit a seven-week high. For the week, January feeders were up $6.50.
5-day outlook: The cattle futures markets bulls flexed their muscles today by producing new for-the-move highs and technically bullish weekly high closes. Near-steady cash cattle prices in trade so far this week and improved boxed beef values should keep selling interest in cattle futures limited in the near term.
More active cash cattle trading late this week saw USDA today reporting steers and heifers fetched an average price of $227.89. That is just slightly down from last week’s average cash cattle trade reported by USDA at $228.19 that was well up from the week prior. The noon report today showed boxed beef cutout values higher, with Choice-grade up $3.61 to $360.89, while Select-grade rose $3.57 to $347.54. Movement at midday was 69 loads. The Choice-Select spread is presently $13.35.
Cattle futures traders were awaiting this afternoon’s USDA monthly cattle-on-feed report. A Reuters survey showed analysts, on average expect cattle on feed as of Dec. 1 at 98.4 percent from the same time last year, at 11.79 million. Placements in November are seen at 92% of last year, at 1.652 million head. Marketings in November are seen at 88.7% from last year at the same time, at 1.530 million head.
30-day outlook: Retailers anticipate strong consumer demand for beef well into the new year. Higher slaughter volumes in recent weeks will help compensate for reduced slaughter due to the Christmas and New Year holidays, as well as any inclement winter weather.
90-day outlook: A surprisingly tame U.S. consumer price index this week likely provided a further boost to U.S. consumer confidence, following the Federal Reserve interest rate cut in early December. 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 corn-for-feed 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 have corn-for-feed needs covered through February as well. Be prepared to make additional purchases if value prices continue.