Hogs
Price action: December lean hog futures fell $0.95 to $58.875, nearer the daily low and for the week down $6.70.
5-day outlook: December lean hog futures saw a big downside “washout” this week to extend the price downtrend but to also suggest a price bottom is close at hand. The market is well oversold, technically, to suggest a corrective rebound in prices could occur next week. The CME cash hog index and cash hog prices also continue to trend down. Big losses in the cattle futures markets today also spilled over into better selling pressure in hog futures.
The latest CME lean hog index is down $1.00 to $67.30. Monday’s projected CME index price is down another 73 cents at $66.57. The national direct five-day rolling average cash hog price quote for today is $59.78. The USDA noon pork report today showed cutout value was up $3.05 at $73.74, led by losses in bellies. Movement at midday was decent at 189.91 loads.
30-day outlook: Nearby lean hog futures plunged to a six-year low as weak cash hog and wholesale pork fundamentals invited spec sellers. Smithfield Foods cited reduced travel as a demand headwind, with elevated fuel prices curbing road-trip activity historically linked to bacon and related products. The USDA noted that bacon demand often slows when inflation and gasoline prices rise, as it complements restaurant meals and travel.
90-day outlook: Adequate frozen U.S. pork stocks and cheaper alternative proteins continue to dampen consumer pork at the meat counter. Heavier hog weights have offset much of the year-over year decline in hog inventories. Demand for U.S. pork abroad has been lackluster and will likely need to improve in the coming months, to help revive the presently depressed lean hog futures bulls..
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 needs covered through the end of December, and are hand to mouth for soymeal for feed needs. Be prepared to make purchases if value prices arise from fall harvest pressure.
Cattle
Price action: December live cattle futures fell $5.35 to $220.95, near the session low, hit a three-week low and for the week down $10.175. November feeder cattle futures lost $8.70 to $337.775, near the daily low, hit a three-week low and for the week down $10.35.
5-day outlook: The cattle futures markets futures markets were rocked to end the trading week and month by a major sell off in the U.S. stock market that saw the major indexes hit multi-week lows and likely saw consumer confidence at least temporarily take a hit. Increasing cattle imports from Mexico have also somewhat eased tight U.S. cattle supplies. Weaker cash cattle trade this week is also putting downside price pressure on the cattle futures markets.
USDA at midday reported active cash cattle trading late this week, with steers averaging $223.95 and heifers $224.18. The agency reported average cash cattle trading last week at $227.06. The noon report today showed mixed boxed beef prices, with Choice grade down $0.40 at $366.68 and Select grade up $1.65 at $353.28. Movement at midday was good at 101 loads. The Choice-Select spread is presently plus $13.60.
30-day outlook: The cattle futures markets are likely to find stronger technical headwinds in the next few weeks, as serious near-term technical damage has been inflicted in both live and feeder futures recently, including today’s bearish weekly low closes. Beef packer margins still in the red are also likely to keep packers from aggressively bidding up for cattle supplies.
90-day outlook: Steady, solid demand for beef at the meat counter in recent months has kept cattle futures markets afloat. However, a sustained sell off in the stock market could significantly dent consumer demand for beef at the meat counter—especially with heightened inflation concerns, including higher energy prices. However, overall, the U.S. economy has been showing enough strength to keep consumers mostly upbeat despite higher gasoline prices at the pump.
What to do: You are covered through the end of December for corn-for-feed, and are hand to mouth for soymeal for feed needs. Be prepared to make purchases if value prices arise from fall harvest pressure.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You are covered through the end of December for corn-for-feed, and are hand to mouth for soymeal for feed needs. Be prepared to make purchases if value prices arise from fall harvest pressure.