Hogs
Price action: June lean hog futures fell $1.55 to $101.90, nearer the session low and for the week up 85 cents.
5-day outlook: The lean hog futures market today saw technical selling pressure as prices remain trapped in a downtrend on the daily bar chart.
The latest CME lean hog index is up 38 cents to $91.43. Monday’s projected cash index price is up a penny to $91.44. The national direct five-day rolling average cash hog price quote for today was not available. The noon report today showed pork cutout value up $2.63 at $100.45, led by gains in loins and butts. Movement at midday was solid at 226.21 loads.
30-day outlook: Both cash and wholesale pork fundamentals have improved of late. Domestic demand remains relatively flat, though grocers should begin ramping up purchases for Memorial Day features and to meet summer grilling demand before slaughter and supplies wane seasonally. However, a potentially price-bearish element is that both average hog and carcass weights having risen in recent weeks.
90-day outlook: Export demand for U.S. pork needs to pick up for cash hog, fresh pork and futures prices to trek to higher ground in the coming weeks and months. Improving relations between the U.S. and China would likely mean better demand for U.S. pork from China. However, recent reports from China indicate that the nation is presently dealing with a glut of pork supplies.
What to do: Get current with feed coverage.
Hedgers: You have 50% of Q2 production hedged with all remaining risk in the cash market.
Feed needs: You should have all your soymeal needs covered through April in the cash market. You should also have corn-for-feed needs purchased through April. Be prepared to make additional purchases.
Cattle
Price action: June live cattle futures rose $1.725 to $245.225, near mid-range for the week down $2.475. May feeder cattle futures gained $2.025 to $360.90, nearer the daily low and for the week down $4.375.
5-day outlook: The live cattle and feeder cattle futures markets saw corrective bounces today but the bears had the better week. The near-term technical posture for both markets deteriorated further this week.
Cattle are being removed from wheat fields earlier than usual, pushing April placements higher, though May could show a decline from last year. Weather remains a key driver - until drier areas receive impactful moisture, the demand for replacement cattle will likely remain subdued.
USDA at midday today reported active cash cattle trading late this week, with steers averaging $246.00 and heifers $246.01. The agency earlier this week reported cash trading last week averaged $248.02. The noon report today showed wholesale boxed beef cutout values higher. Choice-grade was up $3.66 at $387.16, while Select-grade rose $2.38 to $384.96. Movement at midday was light at 44 loads. The Choice-Select spread at midday today was plus $2.20.
30-day outlook: Despite the recent dip in cash cattle prices, tight fed cattle supplies on feedlots will continue to favor feedlot operators in the coming weeks, especially with the outdoor grilling season on the doorstep. Meanwhile, packer margins have eased a bit but remain deep in the red despite firming boxed prices of late. That will continue to disincentivize slaughter, which remains well under year ago.
90-day outlook: A worrisome element for cattle market bulls and for cattle producers is retail gasoline prices that are around the $4.00-a-gallon level. If gasoline prices tick much above that level, consumer confidence will be dented and that could translate into reduced demand for higher-priced beef cuts at the meat counter. However, with U.S. stock indexes at or near record highs, such indicates consumer confidence in the coming months could remain solid.
What to do: Cover corn-for-feed needs through April in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you have full coverage in cash through April. You have corn-for-feed needs covered through April as well. Be prepared to make additional purchases if value prices continue.