Hogs
Price action: December lean hog futures rose $1.20 to $70.125, near the daily high and for the week up $1.10.
5-day outlook: The hog futures market saw short covering today after hitting a contract low on Thursday. Prices remain trapped in a downtrend on the daily bar chart, which means the path of least resistance for futures prices in the near term will remain sideways to lower. The CME cash hog index earlier this week showed signs of stabilization, but that was short-lived as the index resumed its slide late this week.
The latest CME lean hog index is down 24 cents to $80.71. Monday’s projected CME index price is down 51 cents at $80.20. The national direct five-day rolling average cash hog price quote for today is $77.85. The USDA noon pork report today showed cutout value was up $0.81 at $86.10, led by gains in picnics. Movement at midday was 152.28 loads.
30-day outlook: Wholesale pork and cash hog fundamentals have weakened relentlessly, as live hog weights and strong slaughter numbers build seasonally as demand softens into fall. These are bearish fundamental headwinds that will continue to limit the upside in lean hog futures in the coming weeks.
90-day outlook: Holiday retail demand for hams could prove supportive for futures, while frozen pork stocks, export sales and the December USDA Hogs & Pigs report are the next fundamental pieces. Managed money remains heavily short, so a turn in cash or cutout could force short covering in lean hog futures into the end of the year.
What to do: Get current with feed coverage.
Hedgers: You currently have all risk in the cash market.
Feed needs: You have corn-for-feed and soymeal needs covered through September in the cash market. Be prepared to make purchases if value prices continue.
Cattle
Price action: December live cattle futures fell $1.70 to $221.475, nearer the session low and for the week down 67 1/2 cents. November feeder cattle futures lost $5.20 to $331.15, near the session low and for the week down 82 1/2 cents.
5-day outlook: The cattle futures markets saw some profit-taking pressure from the shorter-term speculators today. However, the bulls are keeping alive price uptrends on the daily bar charts.
USDA at midday today reported moderately active cash cattle trading late this week, with steers averaging $219.90 and heifers $220.79. The agency reported average cash cattle trading last week at $220.77. The noon report today showed mixed boxed beef prices, with Choice grade down $2.43 at $374.36 and Select grade up $0.47 at $353.36. Movement at midday was 79 loads. The Choice-Select spread is presently plus $21.00.
30-day outlook: Daily slaughter volumes have crept back up toward normal levels as operations returned to normal, with ICE immigration enforcement at Kansas packing plants pushing slaughter to one of the lowest non-holiday week slaughters ever. Packer margins have improved over the period. At the same time, diesel prices remain elevated, which in turn are passed along as freight and processing expenses. Recent rains across the southern Plains will contribute to the development of winter wheat and ultimately support grazing efforts this fall season.
90-day outlook: Longer-term, the cattle markets bulls still have an ace in the hold: The latest USDA monthly cattle-on-feed report showed August placements and marketings at record lows. The COF report suggested a long cycle that leans price-bullish in the coming months: a small beef cow herd, eight years of drought-forced liquidation, and a tight calf crop.
What to do: You have corn-for-feed and soymeal needs covered through September in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You have corn-for-feed and soymeal needs covered through September in the cash market. Be prepared to make purchases if value prices continue.