Hogs
Price action: April lean hog futures fell 30 cents to $95.15, near mid-range and for the week down $1.025.
5-day outlook: The lean hog futures market saw mild profit-taking pressure today. Today’s bearish weekly low close suggests the speculators may be looking to continue to play the short side early next week. However, still-bullish technicals and the recent rallies in the cash hog and CME lean hog index prices will limit selling interest. Hog futures’ premium to the CME lean hog index also is a positive element for the futures market.
The latest CME lean hog index is up 50 cents to $85.72. Monday’s projected cash index price is up another 6 cents to $85.78. The national direct five-day rolling average cash hog price quote for Thursday afternoon was $60.81. The noon report today showed pork cutout value up $2.67 at $96.10, led by gains in bellies. Movement at midday was 168.84 loads.
30-day outlook: Still historically elevated beef prices at the meat counter are likely to continue to see better substitution demand for pork. Too, demand for pork is likely to remain strong at the retail counter as the Easter holiday and the grilling season inch closer.
90-day outlook: USDA Thursday reported U.S. pork export sales of 56,000 MT that included China taking 15,900 MT. If China continues buying more U.S. pork, that could keep lean hog futures and cash hog prices elevated. However, recent reports of a glut of pork in China could keep China’s imports of U.S. pork lighter.
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 March in the cash market. You should also have corn-for-feed needs purchased through March. Be prepared to make additional purchases.
Cattle
Price action: April live cattle futures fell 47 1/2 cents to $236.325, nearer the daily low and for the week down 12 1/2 cents. March feeder cattle futures fell $4.85 to $360.275, nearer the daily low and for the week up 10 cents.
5-day outlook: The live and feeder cattle futures markets today saw selling pressure amid a big risk-off day in the general marketplace, led by a record-setting meltdown in gold and silver markets that spooked many raw commodity futures traders.
Still-quiet cash cattle trading late this week saw USDA today reporting steers averaging $236.74 and heifers averaging $237.15. USDA Monday reported average cash cattle trading last week at $234.70, up $2.20 from the week prior. The noon report today showed boxed beef cutout values mixed, with Choice-grade down $1.22 to $366.44, while Select-grade rose $2.28 to $363.00. Movement at midday was 57 loads. The Choice-Select spread is presently $3.44.
Another arctic blast forecast to hit the Plains states in the coming days may lead to more livestock stress.
Cattle traders were awaiting this afternoon’s semi-annual USDA cattle inventory report. Most traders expect the report to show U.S. cattle numbers inching down from the last report in July.
30-day outlook: The recent cold snap saw slaughter levels decline as several shifts at beef plants were canceled in addition to the closing of the Tyson plant. Slaughter levels are expected to remain saddled over the near-term as packers adjust to the closing and adjusted output at remaining plants. Volatility in boxed beef is likely as the supply chain siphons out potential kinks. Boxed beef continues to grade at optimal levels, with cattle grades above Choice topping all-time records. All indications point to a continued push higher in boxed beef prices.
90-day outlook: U.S. economic data releases remain mostly upbeat and that suggests consumer attitudes are also upbeat, to imply still-solid demand for beef at the meat counter despite still historically high retail beef prices. Meantime, Texas Governor Greg Abbott late Thursday issued a statewide disaster declaration to “better equip the Texas New World Screwworm Response Team to prevent the potential spread of the NWS fly into Texas and to better protect livestock and wildlife,” said a press release from the governor. The NWS situation will likely continue to be a front-burner matter for the cattle futures markets in the coming months.
What to do: Cover corn-for-feed needs through March 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 March. You have corn-for-feed needs covered through March as well. Be prepared to make additional purchases if value prices continue.