Hogs
Price action: July lean hog futures climbed 65 cents to $108.85 and closed near mid-range.
Fundamental analysis: July lean hog futures made a fresh contract high today before seeing some profit-taking. Some consolidation would be healthy for the market as July futures are near-term overbought. Still, cash fundamentals remain fully bullish and at the highest levels in nearly two years. The CME lean hog index is up another 92 cents to $99.97 as of June 9. The preliminary calculation puts the index up 94 cents to $100.91 tomorrow, surpassing the psychological $100.00 mark. Climbing belly prices continue to underpin pork cutout as well. Cutout was up another $2.11 to $112.99 at midsession today, as all cuts except loins posted gains. Picnics, hams and bellies each posted gains north of $3.00. This morning’s inflation report from the Bureau of Labor Statistics showed pork prices down from both a month and a year ago. That relative cheapness compared to beef likely has consumers opting for pork at the meat counter this grilling season.
Technical analysis: July lean hog futures continue to march higher on the daily bar chart as bulls continue to own the technical advantage. Today’s contract high of $109.625 stands as initial resistance and is reinforced by the psychological $110.00 mark. On consolidation, support stands at $107.20 then the 10-day moving average at $106.20, while further selling pressure has bulls looking to hold support at $105.00.
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: June live cattle rose 75 cents to $227.825, a new all-time high close. August feeders edged $2.075 lower to $311.075.
Fundamental analysis: Cattle futures held a muted tone to begin the session, though edged to a fresh all-time high as the day progressed as traders anticipated another week of record cash prices. Meanwhile, wholesale values continue to firm after showing signs of a pause last week. The noon report showed Choice up $1.88 to $373.64, while Select rose 63 cents to $360.47. While the strength is impressive, it pales in comparison to recent cash trade, which has left packers facing negative margins.
Tight fed cattle supplies continue to force packers to pay up, though uncertainty rings as rising prices will surely crimp retail demand at some point, though when is the looming unknown.
As such, the feeder cattle index extended to a fresh high today as the screw worm threat lingers and supply concerns persist.
Technical analysis: June cattle scored a fresh all-time high, though resistance at $228.625 and technically overbought conditions curbed an extension higher. Bulls continue to firmly grasp the near-term technical advantage, though will face additional resistance at $230.175 and $232.20. Meanwhile, support is layered at $225.050, then at $223.025 and the 10- and 20-day moving averages of $221.34 and $217.575.
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.