Hogs
Price action: October lean hogs rose 70 cents to $96.825, near mid-range and hit a contract high.
Fundamental analysis: Today’s gains in the lean hog futures market saw more technical buying featured amid the solidly bullish near-term chart posture for October hogs. There are also some ideas that consumers may be more reluctant to buy beef at the meat counter this fall, following some recent downbeat U.S. economic data.
The latest CME lean hog index is down 4 cents to $105.87 as of Sept. 6. Thursday’s projected cash hog index is up 6 cents to $105.93. Today’s national direct 5-day rolling average cash hog price quote is $106.55. The noon report today showed pork cutout value rose $1.55 to $115.66, led by gains in bellies and hams. Movement at midday was decent at 190.29 loads.
Technical analysis: Lean hog futures bulls have the solid overall near-term technical advantage. A choppy, seven-week-old price uptrend is in place on the daily bar chart. The next upside price objective for the hog bulls is to close October futures prices above solid chart resistance at $100.00. The next downside price objective for the bears is closing prices below solid technical support at $93.50. First resistance is seen at today’s contract high of $97.75 and then at $99.00. First support is seen at today’s low of $95.85 and then at $95.00
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 September in the cash market, with half coverage for October, November and December. For corn, you now have all needs through October covered in the cash market.
Cattle
Price action: October live cattle rose 97 1/2 cents to $231.15, nearer the daily high and hit a three-week low early on. September feeder cattle gained $1.50 to $353.20, near mid-range and hit a three-week low early on.
Fundamental analysis: The cattle futures markets today saw modest corrective bounces from strong to limit-down losses posted on Tuesday. The bulls are by no means out of the woods yet. They will have to show better followthrough buying interest to suggest today’s lows are just the latest “reaction lows” in the mature bull market runs. That’s some heavy lifting for the bulls to do.
Worrisome for the cattle market bulls is Tuesday’s revised U.S. jobs data that showed only about half of the jobs gained than were previously reported, up to the year ending through March. That and recent weaker U.S. economic data could sap consumer confidence that would show up as less demand for beef at the meat counter.
There was light cash cattle trading reported by USDA today, with steers averaging $238.62 and heifers averaging $238.94. USDA said last week’s cash cattle trade averaged $242.55, which compares to $243.60 the week prior. The noon report today showed wholesale boxed beef cutout lower, with Choice down $1.20 to $406.47, while Select fell $1.00 to $385.96. Movement at midday was decent at 78 loads. The Choice-Select spread is presently $20.51.
Technical analysis: Nine-week-old price uptrends on the daily bar charts for live cattle and feeder cattle futures have been at least temporarily negated with Tuesday’s big losses. The next upside price objective for the live cattle bulls is to close October futures above resistance at this week’s high of $236.875. The next downside technical objective for the bears is closing prices below solid technical support at $222.50. First resistance is seen at $233.00 and then at $235.00. First support is seen at today’s low of $229.00 and then at $227.00.
The next upside price objective for the feeder bulls is to close September futures prices above technical resistance at this week’s high of $362.75. The next downside price objective for the bears is to close prices below solid technical support at $345.00. First resistance is seen at $356.00 and then at $358.00. First support is seen at today’s low of $350.025 and then at $348.00.
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: For soymeal, you have full coverage in cash through July, with half of your needs for August, September, October, November and December covered in cash. For corn, you have all needs through August covered in the cash market, with half of your needs for September and October covered in cash.