Hogs
Price action: August lean hogs fell 30 cents to $109.80, near mid-range after hitting a contract high Monday.
Fundamental analysis: The lean hog futures market saw mild profit-taking pressure from the speculators today, following Monday’s contract high. Still, the hog futures market prices are trending up amid solid hog and pork market fundamentals and amid the record-setting bull run in the cattle markets.
The latest CME lean hog index is up another 68 cents to $99.05 as of June 6, extending the seasonal rally to the highest level since August 2023. Wednesday’s cash index quote is projected up 92 cents at $99.97. The national direct five-day rolling average cash hog price quote today is $103.29. The noon report today showed pork cutout value rose 86 cents to $111.15, led by a gain in bellies. That’s the highest cutout value since August of 2023. Movement at midday was decent at 154.96 loads. Pork packer margins are modestly in the black, at present.
Hog traders continue to monitor this week’s U.S.-China trade talks taking place in London. There has been no official comments on the meeting from either side. There are so-far unsubstantiated rumors that some modest progress is being made between the world’s two largest economies.
Technical analysis: Lean hog futures bulls have the solid overall near-term technical advantage. Prices are in a two-month-old uptrend on the daily bar chart. The next upside price objective for the hog bulls is to close August prices above solid chart resistance at $112.50. The next downside price objective for the bears is closing prices below solid technical support at $105.00. First resistance is seen at the contract high of $110.65 and then at $111.00. First support is seen at $108.00 and then at $107.00.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You have all corn-for-feed and soybean meal needs covered in the cash market through July.
Cattle
Price action: August live cattle futures closed $1.05 lower to $218.20 though settled nearer today’s highs. August feeders climbed $1.50 to $313.15, nearer session highs.
Fundamental analysis: Cattle futures saw choppy trade today as heavily overbought conditions combat persistent, robust strength in the cash cattle market. Futures saw selling early in the session as bears try to build some momentum but steep discounts to the cash market are difficult to ignore, spurring buying in the latter portion of today’s session. USDA reported some catch up sales this morning averaging $236.43, with a price range from $232.00 up to $244.00. The cash market shows little signs of slowing down with another gain likely this week. Still, packer margins remain deep in the red, as Hedgersedge reported beef cutting margins at -$163.20. Margins have been deeply in the red for weeks and packers have continued to produce beef in order to meet obligations. While the wholesale beef industry is at the second highest mark ever, it has done little to offset the historic gains seen in the cash cattle market. Choice cutout rose another $3.91 to $371.16 this morning, while Select climbed 89 cents to $359.82. Movement totaled 62 loads in a.m. trade.
Feeder futures saw relative strength today, driven higher by the feeder cattle index hitting record highs. The index rose another $4.30 to a record $310.46. Feeder futures are actually trading above the index, contrary to the steep discounts seen in fats, indicating traders anticipate the closure of the southern border will continue, further driving feeders higher.
Technical analysis: August live cattle futures saw relative weakness today compared to other contracts. Bulls continue to maintain full control over the technical advantage. Initial resistance stands at $219.25 and is reinforced by the contract high of $220.05. Strength above that mark targets resistance at $222.85. Support comes in at $217.50 then the 10-day moving average at $214.65 on a reversal lower, though the downside is likely to remain limited.
August feeders hit a record high today as bulls continue to hold full control of the technical advantage. Resistance at $314.20 is backed by psychological resistance at $315.00. Bulls are seeking to hold initial support at $310.00 on a turn lower, else a test of the 10-day moving average at $306.40 seems likely.
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: You have all corn-for-feed and soybean meal needs covered in the cash market through July.