Hogs
Price action: December lean hog futures rose 12 1/2 cents to $81.90, nearer the session low and hit a nine-week low early on. For the week, December hogs were down 47 1/2 cents.
5-day outlook: The lean hog futures market fared pretty well today in the face of the steep price downdrafts and limit-down trades in the cattle futures markets today. However, if the cattle futures continue to slump, buying interest in hog futures will be limited. Slumping cash hog prices the past couple weeks will continue to limit buying interest in futures. Also, near-term technicals in lean hog futures firmly favor the bears. That will continue to encourage the chart-based bears to play the short side in the near term. Lean hog futures’ present discounts to the cash index may somewhat limit selling interest in hog futures.
The latest CME lean hog index fell 47 cents to $96.12. Monday’s projected cash index price is down another 68 cents to $92.95. The national direct five-day rolling average cash price today is $89.15. The rolling average is down around $4.00 from last Friday. The noon report today showed pork cutout value up $2.95 to $102.66, led by gains in bellies. Movement at midday was good at 273.97 loads.
30-day outlook: Next week’s scheduled summit meeting between President Trump and Chinese President Xi Jinping may be one of the most important events of the year for U.S. agriculture. China is a major pork importer but has shunned U.S. pork purchases in recent months. Hog market watchers will be anxiously awaiting the outcome of the summit meeting. A positive outcome from the summit could set the tone for more Chinese buying of U.S. pork in the coming weeks/months, and reverse the present price downtrend in lean hog futures.
90-day outlook: As the holidays quickly approach, product demand should stabilize into year-end, with grocers likely eager to fill their cases with consumer price-friendly pork cuts.
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 fell the $7.25 daily trading limit to $232.925 and hit a three-week low. For the week, December cattle futures were down $7.90. January feeder cattle futures closed down the daily limit of $9.25 to $348.175, hit a three-week low and for the week down $21.125. Cattle futures’ daily trading limits will be expanded Monday.
5-day outlook: Cattle futures traders were badly spooked today by news Mexico’s agriculture minister will travel to Washington, D.C. next week with the aim of reaching an agreement on the reopening of the border to Mexican cattle amid an outbreak of the flesh-eating screwworm parasite, President Claudia Sheinbaum said on Thursday and as reported by Reuters. This news followed the recent pronouncements from President Trump that he wants lower U.S. beef prices and intends to import beef from Argentina that rattled beef producers and cattle futures markets.
Cash cattle trading turned more active late this week. USDA at midday today reported steers fetched an average price of $237.86 and light heifer trade averaged $239.12. That compares to last week’s average cash cattle trade at $239.82. The noon report today showed boxed beef cutout values firmer, with Choice-grade up $2.76 to $376.90, while Select-grade rose $2.87 to $357.61. Movement at midday was solid at 109 loads. The Choice-Select spread is presently $18.29.
30-day outlook: Despite this week’s cattle futures prices’ setbacks, overall supply and demand fundamentals for the cash cattle and beef markets remain solid. This is evidenced by the recent rebound in cash cattle and boxed beef prices. Seasonals suggest lower cattle slaughter levels in the coming weeks. Also, the last USDA cattle-on-feed report reminds that cattle supplies in U.S. feedlots remain historically tight. Consumer demand at the meat counter remains good, despite the historically elevated prices.
90-day outlook: Key for the cattle markets in the coming months will be consumer demand for beef remaining good. The major U.S. stock indexes today hit record highs. The Federal Reserve next week is fully expected to cut U.S. interest rates by 0.25%. Those are bullish elements for stronger consumer confidence and still-good demand for beef at the meat counter.
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.