Hogs
Price action: December lean hog futures fell 22 1/2 cents to $82.375, nearer the daily low and hit a two-month low. For the week, December hogs were down $1.65.
5-day outlook: December lean hogs today saw a technically bearish weekly low close for the second Friday in a row, which will further encourage the chart-based bears to play the short side early next week. Big losses in the cattle futures markets today also limited buying interest in hog futures. However, the hog futures market is now short-term oversold, technically and due for a corrective bounce soon. Serious near-term technical damage has been inflicted to suggest more downside in the near term.
The latest CME lean hog index fell 61 cents to $96.59. Monday’s projected cash index price is down another 47 cents to $96.12. The index has dropped around $3.00 the past week. The national direct five-day rolling average cash price today is $93.75. The noon report today showed pork cutout value up $2.57 to $104.74, led by gains in all cuts. Movement at midday was good at 226.47 loads.
30-day outlook: The scheduled late-October 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.
90-day outlook: The U.S. stock market has gotten a bit wobbly recently, amid regional U.S. bank worries and the elevated U.S.-China tensions. Many stock market observers have been saying equities are over-valued. If consumer confidence starts to decline and with pork at the meat counter still a much more affordable source of protein than elevated beef prices, better U.S. consumer demand for pork in the coming weeks would support rebounds in cash hog, fresh pork and futures markets.
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 October covered in the cash market.
Cattle
Price action: December live cattle futures fell $6.05 to $241.825, near the daily low and for the week down 70 cents. November feeder cattle futures closed down the daily limit of $9.25 to $371.70 and for the week down $4.20. Cattle futures’ daily trading limits will be expanded Monday.
5-day outlook: Cattle futures traders were badly spooked today by the announcement Thursday afternoon by President Trump that his administration is working on lowering beef prices at the meat counter. Trump provided no details on how the administration will proceed, but the cattle futures markets bulls ran for cover today due to the keen uncertainty of the matter. Key for the bulls is to stop the bleeding fast. Strong follow-through selling pressure on Monday could mean the end of the major bull runs in the cattle futures markets.
Cash cattle trading turned more active today. USDA at midday today reported steers fetched an average price of $239.73 and heifers an average of $239.57. That compares to last week’s average cash cattle trade at $234.07. The noon report today showed boxed beef cutout values firmer, with Choice-grade up 89 cents to $367.00, while Select-grade rose $1.43 to $350.36. Movement at midday was solid at 139 loads. The Choice-Select spread is presently $16.64.
30-day outlook: Overall supply and demand fundamentals for the cash cattle and beef markets remain solid. 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 U.S. stock indexes have recently hit record highs. However, consumer confidence could be dented by continued elevated U.S.-China trade tensions. This matter will be closely watched in the coming months, especially the late-October summit between Presidents Trump and Xi.
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 December. For corn, you have all needs through October covered in the cash market. Be prepared to make additional purchases if value prices continue.