Livestock producers: Extend feed coverage... We advise livestock producers to cover through September for corn and soymeal needs in the cash market. Corn futures fell under heavy selling the past few weeks despite firm fundamental support and deteriorating crop conditions. Meal futures are well off the July highs and are entering value territory despite persistent robust demand, evidenced in this week’s crush report. You were previously hand to mouth on feed coverage but now have coverage in cash through the end of September.
Hogs
Price action: October lean hog futures fell $1.325 to $83.025, near mid-range and closed at a four-week-low close.
Fundamental analysis: The lean hog futures market saw technical selling from the speculators featured today as prices saw a downside breakout from a bearish pennant pattern on the daily bar chart.
The cash hog market is also trending down, to keep buyer interest in futures limited. The latest CME lean hog index down 51 cents to $97.17. Thursday’s projected CME index price is down 22 cents at $96.95. The national direct five-day rolling average cash hog price quote for today is $99.54. The USDA’s noon pork report today showed cutout value was up $2.40 at $102.23, led by gains in hams, loins and bellies. Movement at midday was 142.52 loads.
Technical analysis: October lean hog futures today saw a downside price breakout from al bearish pennant pattern 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 $86.00. The next downside price objective for the bears is closing prices below solid technical support at the June low of $79.775. First resistance is seen at $83.50 and then at this week’s high of $84.90. First support is seen at last week’s low of $82.10 and then at $81.00.
What to do: Get current with feed coverage.
Hedgers: You currently have all risk in the cash market.
Feed needs: You have corn-for-feed and soymeal needs covered through September. Be prepared to make purchases if value prices continue.
Cattle
Price action: October live cattle rose $1.575 to $229.475, nearer the daily high and hit a three-week high. September feeder cattle gained $2.225 to $348.375, nearer the daily high and hit a three-week high.
Fundamental analysis: The live cattle futures market today saw fresh technical buying as bulls have momentum and have established fledgling price uptrends on the daily bar charts. Good gains in the stock market recently and a weaker U.S. dollar index that favors the monetary policy doves also are supportive to the cattle markets, from the perspective of better consumer confidence.
USDA at midday today reported light cash cattle trading so far this week, with steers averaging $235.00 and heifers $234.22. The agency Monday reported cash cattle trade last week averaged $233.06, which compares to an average of $230.48 fetched the week prior. The noon report today showed mixed boxed beef prices, with Choice grade down $0.40 at $369.25 and Select grade up $3.52 at $350.02. Movement at midday was 60 loads. The Choice-Select spread is presently plus $19.23.
Technical analysis: October live cattle and September feeder cattle futures see fledgling price uptrends in place on the daily bar charts. The next upside price objective for the live cattle bulls is to close October futures above resistance at $235.00. The next downside technical objective for the bears is closing prices below solid technical support at the July low of $216.95. First resistance is seen at $232.00 and then at $233.00. First support is seen at today’s low of $227.40 and then at this week’s low of $225.50.
The next upside price objective for the feeder bulls is to close September futures prices above technical resistance at $360.00. The next downside price objective for the bears is to close prices below solid technical support at the June low of $337.90. First resistance is seen at $350.00 and then at $352.00. First support is seen at today’s low of $344.35 and then at this week’s low of $339.90.
What to do: You have corn-for-feed and soymeal needs covered through September in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You have corn-for-feed and soymeal needs covered through September in the cash market. Be prepared to make purchases if value prices continue.