Hogs
Price action: June lean hogs rose $2.225 to $100.275, nearer the daily high and hit a seven-week high.
Fundamental analysis: The lean hog futures market saw a solid rally today amid improving cash hog and pork market fundamentals. A strong rebound in the U.S. stock market today, following reports the U.S. Treasury secretary said the U.S.-China trade tensions are unsustainable and are likely to de-escalate, also supported the hog market. China is a major U.S. pork importer. Solid gains in the cattle futures markets today also spilled over into buying interest in hog futures.
The latest CME lean hog index is up another 25 cents to $85.71 as of April 18, the third consecutive daily gain. Wednesday cash index price is projected up another 37 cents at $86.08. The national direct five-day rolling average cash hog price quote today is $86.00. The noon report today showed pork cutout value rose 31 cents to $96.70, led by gains in bellies. Movement at midday was decent at 181.37 loads.
Technical analysis: Lean hog futures bulls have the overall near-term technical advantage as prices are trending up on the daily chart. The next upside price objective for the hog bulls is to close June prices above solid chart resistance at the contract high of $106.35. The next downside price objective for the bears is closing prices below solid technical support at $92.00. First resistance is seen at $101.00 and then at $102.00. First support is seen at $99.00 and then at today’s low of $98.10.
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 needs covered in the cash market through April. You have all soymeal needs covered in the cash market through May.
Cattle
Price action: June live cattle futures surged $2.525 to $206.275 and closed near session highs. August feeder cattle climbed $2.10 to $291.25, nearer session highs.
Fundamental outlook: Cattle futures posted strong gains today amid an overall risk-on tone in the marketplace. Futures facing profit-taking Monday and resurgent strength today, both in line with movement in the equity markets, reflects the correlating nature of live cattle futures in this volatile environment. Traders continue to be wary about taking risk given volatile trade policy that is dictating market sentiment and will likely continue to do so. Still, cattle fundamentals continue to be robust as beef demand continues to pace with reduced supply. Cash cattle trade is expectedly slow to start the week, though similar to last week, a small lot of heifers traded hands at higher prices again on Monday. That once again sets the tone for firmer trade again this week. Wholesale beef pushed higher this morning as well as Choice cutout climbed $1.53 to $335.05, the highest mark in a week. Select rose $1.40 to $320.17 in a.m. trade.
The Feeder Cattle index continues to lift feeder futures. While the index was down $1.15 to $292.42, that continues to be above nearby futures and will support prices on a pull back. Weakness seen in corn today helped lift feeders as well.
Technical outlook: Bulls have quickly regained the technical advantage in June live cattle futures. Their next objective is closing prices above the contract high close of $207.40, dating back to April 2. Strength above that mark targets resistance at $207.725 then $210.00. Meanwhile, support comes in at the psychological $205.00 mark then $203.75 on profit-taking.
Bulls own a slight technical advantage in August feeder cattle futures, though staunch resistance looms over the market at $293.50. Additional resistance lies on the way at $292.30. On selling pressure, bulls are looking to hold prices above support at $290.00, which is backed by support at $289.15.
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 needs covered in the cash market through April. You have all soymeal needs covered in the cash market through May.