Hogs
Price action: April lean hog futures fell $0.775 to $91.275, near the daily low, hit a nine-week low and for the week were down $2.175.
5-day outlook: The lean hog futures market saw another technically bearish weekly low close today, which sets the stage for follow-through selling pressure from the chart-based speculators early next week. Still shaky trader/investor risk appetite in the general marketplace this week kept the hog futures bulls very timid amid the ongoing Middle East war.
The latest CME lean hog index is up 11 cents to $92.04. Monday’s projected cash index price is down 9 cents to $91.95. The national direct five-day rolling average cash hog price quote for today is $69.73. The noon report today showed pork cutout value up $2.84 to $100.89, led by gains across the board. Movement at midday was 163.91 loads.
30-day outlook: The war in Iran has created keener economic uncertainty, which is not good for consumer confidence and spending. If U.S. consumer confidence starts to erode more substantially, pork demand will likely benefit from consumers switching to the less expensive pork cuts at the meat counter in the coming weeks.
90-day outlook: An important element in the coming months for the cash hog and futures markets will be export demand for U.S. pork. Reports out of China say the world’s leading pork consumer is flush with hogs, which does not bode well for better Chinese purchases of U.S. pork. A successful Trump-Xi summit in China, now scheduled for sometime in May, could produce increased China demand for U.S. pork. The upcoming grilling season coincides with a seasonal contraction in hog supplies and should support hog and pork prices in the coming few months.
What to do: Get current with feed coverage.
Hedgers: You have 50% of Q2 production hedged with all remaining risk in the cash market.
Feed needs: You should have all your soymeal needs covered through March in the cash market. You should also have corn-for-feed needs purchased through March. Be prepared to make additional purchases.
Cattle
Price action: April live cattle futures rose $0.775 to $234.05, nearer the daily high and for the week up $4.00. May feeder cattle futures gained $2.95 to $346.375, nearer the daily high and for the week up $7.20.
5-day outlook: The live cattle and feeder cattle futures markets bulls had a decent week, which gives them some momentum heading into trading early next week. Workers remain on strike at the JBS-owned meatpacking plant in Greeley, Colorado, which still has the cattle market bulls uneasy.
More active cash cattle was reported by USDA at midday today, with the agency saying steer prices averaged $234.05 and heifer prices averaged $234.41. USDA Monday reported average cash cattle trading last week at $234.83—down $5.11 from the week prior The noon report today showed boxed beef cutout values slightly firmer, with Choice-grade up 12 cents to $400.42, while Select-grade rose 33 cents to $392.78. Movement at midday was 67 loads. The Choice-Select spread is presently plus $7.64.
This afternoon’s monthly USDA Cattle-on-Feed report was expected to show continued tight U.S. cattle supplies, with pre-report estimates showing on-feed numbers down nearly 1% and marketings down over 7.5% from one year ago. Placements, the most closely watched figure, are expected to be around steady to slightly up from a year ago.
30-day outlook: Weakening cash trade and firming boxed beef values recently have led to improved packer margins, which is incentivizing packing plants to absorb cattle from plant closures and adding Saturday kills. However, wildfires in Nebraska and extreme temps throughout the Plains in the coming days are likely to hand feedlots extra bargaining power in cash negotiations in the coming weeks, as supply uncertainties grow.
90-day outlook: The Middle East war and its economic impact on consumers—namely higher gasoline prices—may play a key role in demand for beef at the meat counter over the next few months. Outdoor grilling season is getting closer but if gasoline prices at the pump are close to or above $4.00 a gallon, many consumers will be looking to buy more economical protein in the grocery store. Longer-term supply and demand fundamentals remain sound for the cattle and beef markets. While cash cattle prices have declined recently, boxed beef values have firmed. Historically tight cattle supplies on feedlots will continue to limit the downside in futures prices.
What to do: Cover corn-for-feed needs through March 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 March. You have corn-for-feed needs covered through March as well. Be prepared to make additional purchases if value prices continue.