Hogs
Price action: August lean hog futures settled 95 cents higher at $107.90.
Fundamental analysis: Hog futures rose on corrective buying today, supported by key technical support. Cash hog fundamentals continue to slip, which is likely to eventually weigh on hog futures, but sustained selling efforts were thwarted by strong technical support today. The downturn in the cash hog market shows little sign of slowing down quite yet. The CME lean hog index is down 77 cents to $110.99 as of June 30, the second straight daily decline. The preliminary calculation puts the index down another 77 cents to $110.22 tomorrow. As expected, very little movement is taking place in the cash market this week. Hog slaughter is bottoming seasonally amid the holiday shortened week which provides little clarity to the health of the cash market. Weakness is likely to persist this week and price action early next week will be important. Pork cutout fell 42 cents at midsession today, led by a $10.90 plunge in butts.
Technical analysis: August lean hog futures saw strong corrective gains today. Bears continue to retain a modest technical advantage. Gains stopped shy of 20-day moving average resistance today, which persists at $108.85. Strength above that mark has bulls targeting the $110.00 mark. Support comes in at $106.55, the 40-day moving average, on a reversal lower.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
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.
Cattle
Price action: August live cattle rose $1.70 to $212.45, near the daily high. August feeder cattle rose $3.00 to $309.025, near the session high.
Fundamental analysis: The cattle futures market bulls continue to show resilience on price setbacks. Recent improved trader/investor risk appetite in the general marketplace is also supporting speculator buying interest in cattle futures. The still-steep discount that live cattle futures hold to the cash market is limiting selling interest in futures.
Cash cattle trade so far this week remains lighter, with USDA at midday reporting steers so far this week fetching an average price of $223.75 and heifers averaging $220.89. Last week’s average cash cattle trade was $229.51. The noon report today showed boxed beef values rose, with Choice grade up $1.53 to $397.13, while Select gained 93 cents to $380.99. Movement at midday was decent at 67 loads. The Choice-Select spread is presently $16.14.
Still-elevated fresh beef prices and historically small numbers of cattle on U.S. feedlots remain bullish underlying fundamental elements for the cattle futures markets. Cattle slaughter levels remain below year-ago by a wide margin.
Technical analysis: Live and feeder cattle futures bulls have the overall near-term technical advantage. The next upside price objective for the live cattle bulls is to close August futures above resistance at the contract high of $220.05. The next downside technical objective for the bears is closing prices below solid technical support at last week’s low of $207.70. First resistance is seen at $213.00 and then at this week’s high of $214.525. First support is seen at $210.00 and then at today’s low of $208.925.
The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at the contract high of $310.025. The next downside price objective for the bears is to close prices below solid technical support at last week’s low of $300.05. First resistance is seen at this week’s high of $311.275 and then at $313.00. First support is seen at $306.00 and then at today’s low of $303.75.
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.