Hogs
Price action: July lean hog futures closed a dime higher at $107.20 and near mid-range, while deferred contracts saw stronger gains.
Fundamental analysis: Deferred hog futures continue to lead strength while nearby futures consolidate following recent strong gains. Traders have built premiums into futures over the past couple of weeks, showcasing the shift in sentiment over the course of the same time period. Prices continue to charge higher on the daily bar chart, maintaining uptrends, showing anticipation of continued cash market strength through the summer months as summer grilling demand underpins prices. The CME lean hog index is up another 80 cents to $98.37 as of June 5. The preliminary calculation puts the index up another 68 cents to $99.05 tomorrow, continuing the recent string of strong gains. Pork cutout gave up a portion of Friday’s strong gains this morning, slipping 68 cents to $110.83. Losses in hams, which led cutout higher Friday, undercut wholesale pork this morning, though ribs, butts and loins saw strong gains.
Technical analysis: July lean hog futures made a fresh for-the-move high today before seeing consolidation later in the session. Bulls continue to maintain full control of the technical advantage and are looking to topple resistance at $107.65, today’s high, before tackling resistance at $109.00. Support comes in at the prior high of $106.05 then the 10-day moving average at $105.00 on a reversal lower.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You have all corn-for-feed and soybean meal needs covered in the cash market through July.
Cattle
Price action: August live cattle rose 37 1/2 cents to $219.25, nearer the session high and set another contract high. Nearby June live cattle closed up 70 cents at $226.75 and hit a record high of $227.875. August feeder cattle rose $1.50 to $311.65, near the daily high and hit a contract high and record high of $311.75.
Fundamental analysis: The cattle futures markets early on today saw normal pauses and mild profit-taking pressure from speculators amid their record-setting bull runs. Then near the end of the session buyers in live and feeder cattle futures were more aggressive to produce higher closes.
Cash and beef market fundamentals remain solid. Steep discounts that futures prices have to the cash cattle market are likely to limit the downside for futures this week. Cash cattle trading last week averaged $236.62. That’s up a stunning $6.68 from the week prior and the seventh straight week of record-high cash cattle average prices. We expect cash cattle trade this week to be at least at steady money. The noon report today showed wholesale boxed beef values higher, with Choice-grade gaining $1.53 to $366.61 and Select rose $3.15 to $359.88. Movement was light at 42 loads. The Choice-Select spread is $6.73.
Technical analysis: Live and feeder cattle futures bulls have the solid overall near-term technical advantage. The next upside price objective for the live cattle bulls is to close August futures above resistance at $225.00. The next downside technical objective for the bears is closing prices below solid technical support at $210.00. First resistance is seen at today’s contract high of $220.05 and then at $221.00. First support is seen at Friday’s low of $217.625 and then at $216.00.
The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at $315.00. The next downside price objective for the bears is to close prices below solid technical support at $300.00. First resistance is seen at today’s contract high of $311.725 and then at $313.00. First support is seen at today’s low of $308.725 and then at $306.00.
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: You have all corn-for-feed and soybean meal needs covered in the cash market through July.