Hogs
Price action: December lean hog futures rose 42 1/2 cents to $79.40, nearer the daily high after hitting a nearly four-month low early on. For the week, December hogs were down $1.325.
5-day outlook: The lean hog futures market today got a tepid short-covering reprieve from the steady technical selling pressure that has been in place the past month. December hogs remain trapped in a price downtrend and the chart-based speculator bears will likely be back at it next week. Deteriorating cash hog prices will also favor the hog bears until the cash market bleeding stops. Bulls are hoping lean hog futures’ present discounts to the cash index will work to limit selling interest in hog futures in the near term.
The latest CME lean hog index is down another 26 cents to $90.60. Monday’s projected cash index price is down another 87 cents to $89.73. The national direct five-day rolling average cash price today is $84.65—down over $3.00 from last Friday’s quote. The noon report today showed pork cutout value up $2.57 to $99.75, led by gains in butts and loins. Movement at midday was decent at 205.85 loads.
30-day outlook: It’s hard to believe Thanksgiving is creeping up so fast. As the holidays approach, retailers will likely ramp up their demand for pork and do more ham features as many consumers may choose to forego more expensive beef cuts and buy hams.
90-day outlook: Recent U.S. trade deals and the U.S.-China one-year trade truce has hog producers hopeful for better global demand for U.S. pork in the coming months. China is a major pork importer but has shunned U.S. pork purchases in recent months.
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 December in the cash market. For corn, you now have all needs through November covered in the cash market.
Cattle
Price action: December live cattle futures rose $2.575 to $221.35, near mid-range and for the week down $8.325. January feeder cattle futures closed up $3.975 to $319.575, near mid-range and for the week were down $12.35.
5-day outlook: The cattle futures markets today saw short-covering reprieves from their recent price downdrafts. However, the bulls are by no means out of the woods yet. Major near-term technical damage has been inflicted in live and feeder cattle futures markets the past three weeks, which is likely to continue to invite confident speculator bears to the short sides of the markets next week.
Active cash cattle trading this week sees USDA reporting at midday steers and heifers fetched an average price of $228.97. That compares to last week’s average cash cattle trade at $230.86. The noon report today showed boxed beef cutout values mixed, with Choice-grade down 54 cents to $377.43, while Select-grade was up $1.44 to $362.20. Movement at midday was good at 101 loads. The Choice-Select spread is presently $15.23.
30-day outlook: Cattle futures market traders have been psychologically damaged by the recent proclamations from the Trump administration to lower beef prices at the meat counter, including importing more beef from Argentina. The potential reopening of the southern U.S. border to Mexican cattle also looms price-bearish for cattle futures. Said Glen Ring, Pro Farmer’s longtime friend and veteran livestock market watcher this week: “What ultimately scares me about the current events is my experience--that when liquidation explodes in the cattle arena, logic flies out the window.” We suspect that the selling purge in the cattle futures markets will run its course soon, likely by the end of next week.
90-day outlook: While cattle futures traders have been psychologically damaged, consumer demand for beef at the meat counter remains strong, supporting wholesale boxed beef values and ultimately packer margins. If this pattern holds, it will encourage larger cattle slaughter volumes which will reduce fed cattle supplies in feedlots, which are still historically very tight. Remember that futures markets generally tend to overdo price action on the upside and on the downside. We believe that to be the case in the cattle futures markets at present. Also key for the cattle markets in the coming months will be consumer confidence. The U.S. stock indexes recently hit record highs. The Federal Reserve last week cut U.S. interest rates U.S.-China trade tensions have eased, with other trade deals also falling into place. These are bullish elements for stronger consumer confidence and still-solid consumer demand for beef in the coming months.
What to do: Cover your corn-for-feed needs in the cash market through November.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you have full coverage in cash through December. For corn, you have all needs through November covered in the cash market. Be prepared to make additional purchases if value prices continue.