Hogs
Price action: July lean hog futures closed 15 cents lower to $111.65 and closed nearer session lows.
Fundamental analysis: Hog futures opened higher and made a fresh contract high today before reversing lower as selling pressure in outside markets weighed heavily on prices. Steep losses in cattle futures likely weighed heavily on hogs today as well. Summer futures are overbought as well and have been for over a week, which likely fueled profit-taking efforts today. While futures faced pressure, the cash market continued to march higher with little sign of slowing down. The CME lean hog index is up another 89 cents to $103.70 as of June 13. The preliminary calculation puts the index up another $1.25 to $104.95 tomorrow, which would mark the biggest daily gain in the index so far during the current seasonal climb. The index is just $1.05 away from the July 2023 peak, a break above $106.00 would peg the index at the highest level since August 2022. Pork cutout did pull back modestly this morning following strong gains the last couple of days. Losses in bellies led cutout lower, not surprising given they have led the recent march higher. Movement did pick up this morning amid lower prices, indicating robust grocer demand at weaker prices.
Technical analysis: July lean hogs posted a fresh contract high this morning before undergoing profit-taking. Bulls continue to maintain full control of the technical advantage and are looking to topple resistance at today’s contract high of $112.50. Above that mark, bulls are eyeing resistance at $115.00. Support comes in at the psychological $110.00 mark on continued profit-taking, which is reinforced by support at $108.90, the prior contract high close, then $108.70, the 10-day moving average.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You have all of your soymeal and corn-for-feed needs covered in the cash market through July. You also have half of your soymeal needs for August, September and October covered in cash.
Cattle
Price action: August live cattle fell $4.90 to $210.65, marking a two-week low close, while August feeder cattle futures sunk $6.875 to $303.35.
Fundamental analysis: Cattle faced pressure today amid corrective selling despite another week of record cash cattle trade last week. Cash cattle averaged $238.68, up $2.06 from the previous week, marking gains for the ninth consecutive week and the eighth straight record. While it appears bulls may be experiencing exhaustion, it certainly could prove short-lived, much like the mid-May pause. Wholesale strength continues to also lend support, with the noon report showing Choice up another $3.07 to $385.18, while Select was up $2.79 to $370.26. Movement totaled 50 loads.
Some of today’s price action could be attributed a risk-off tone as unknowns around the Israel/Iran conflict linger, though some concerns around the demand effects of record prices. Packers continue to face tight fed cattle supplies and negative cutting margins as wholesale prices continue to lag in comparison to cash trade.
Technical analysis: August live cattle ended the session below the 20-day moving average of $212.71 though sellers were limited by support at the 40-day moving average of $209.87, which will now serve as initial support. However, bulls continue to focus on taking out last week’s high of $220.05, while a move below the 40-day will open the door to a test of the 100-day moving average, trading at $200.51.
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: You have all of your soymeal and corn-for-feed needs covered in the cash market through July. You also have half of your soymeal needs for August, September and October covered in cash.