Hogs
Price action: October lean hogs rose 40 cents to $97.525, near mid-range.
Fundamental analysis: The lean hog futures market saw some mild technical buying to start the trading week, as a solid price uptrend remains in place on the daily chart for October lean hogs, with prices not far below last week’s contract high. The hog market bulls were also encouraged today by news that U.S. and China trade officials are making progress in talks going on in Madrid, Spain. A new U.S.-China trade accord could mean more China purchases of U.S. pork.
The latest CME lean hog index is up 10 cents to $106.14. Tuesday’s projected cash hog index is steady at $106.14. Today’s national direct 5-day rolling average cash hog price quote is $106.85. The noon report today showed pork cutout value up 19 cents to $114.70, led by gains in butts and picnics. Movement at midday was decent at 183.11 loads.
Technical analysis: Lean hog futures bulls have the solid overall near-term technical advantage. A choppy, two-month-old price uptrend is in place on the daily bar chart. The next upside price objective for the hog bulls is to close October futures prices above solid chart resistance at $100.00. The next downside price objective for the bears is closing prices below solid technical support at $93.50. First resistance is seen at the contract high of $98.45 and then at $99.00. First support is seen at last Friday’s low of $96.725 and then at $95.00
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 September in the cash market, with half coverage for October, November and December. For corn, you now have all needs through October covered in the cash market.
Cattle
Price action: October live cattle rose $4.625 to $234.60, near the daily high. September feeder cattle gained $8.40 to $35.80, near the session high.
Fundamental analysis: The cattle futures markets bulls again showed keen resilience to start the trading week, after suffering knock-down punches Friday. Key for the bulls now will be to show good follow-through buying strength soon, which would begin to suggest last week’s lows were just “reaction lows” in revived price uptrends on the daily charts. But right now the bulls still have some heavy lifting to do to suggest price uptrends can be restarted.
USDA today reported last week’s average cash cattle trading price was $239.33. That compares to the prior week’s cash cattle trade that averaged $242.55. The noon report today showed wholesale boxed beef cutout firmer, with Choice-grade up $1.85 to $401.89, while Select rose 15 cents to $378.59. Movement at midday was 41 loads. The Choice-Select spread is presently $23.30.
Technical analysis: The next upside price objective for the live cattle bulls is to close October futures above resistance at $238.00. The next downside technical objective for the bears is closing prices below solid technical support at last week’s low of $228.80. First resistance is seen at $235.00 and then at $236.00. First support is seen at $232.00 and then at $230.00.
The next upside price objective for the feeder bulls is to close September futures prices above technical resistance at $363.00. The next downside price objective for the bears is to close prices below solid technical support at last week’s low of $349.725. First resistance is seen at $360.00 and then at $362.00. First support is seen at $353.00 and then at today’s low of $353.00.
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: For soymeal, you have full coverage in cash through July, with half of your needs for August, September, October, November and December covered in cash. For corn, you have all needs through August covered in the cash market, with half of your needs for September and October covered in cash.