Hogs
Price action: August lean hogs fell 55 cents to $106.95, nearer the session low and hit a four-week low early on.
Fundamental analysis: The lean hog futures market today saw some more chart-based selling pressure as the near-term technical posture for August hogs has deteriorated the past several sessions. Solidly lower cattle futures prices today also limited buying interest in hog futures.
Cash hog and fresh pork market fundamentals have also become less bullish recently. The latest CME lean hog index is down 26 cents to $111.76 as of June 27, the first daily decline since May 9. Wednesday index is projected down another 77 cents at $110.99. The national direct five-day rolling average cash hog price quote today is $109.53. The noon report today showed pork cutout value fell $2.28 to $113.09, led by declines in bellies and butts. Movement at midday was 219.76 loads.
Last week’s USDA Hogs & Pigs Report favored the bearish camp. Also, the lean hog futures market appears to have topped right around the annual low in hog slaughter.
Technical analysis: Lean hog futures bulls still have the overall near-term technical advantage but a price uptrend on the daily bar chart has been negated. The next upside price objective for the hog bulls is to close August prices above solid chart resistance at the contract high of $113.375. The next downside price objective for the bears is closing prices below solid technical support at $104.00. First resistance is seen at this week’s high of $109.475 and then at $110.00. First support is seen at today’s low of $106.45 and then at $105.00.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: For soymeal, you have full coverage in cash through July, with half of your needs for August, September, October, November and December covered in cash. For corn, you have all needs through August covered in the cash market, with half of your needs for September and October covered in cash.
Cattle
Price action: August live cattle futures closed $3.125 lower at $210.75, on session lows. August feeder cattle futures plunged $4.8125 to $305.85.
Fundamental analysis: Cattle futures underwent heavy selling today following a USDA announcement that the Mexican border will see a phased reopening for cattle imports. USDA will reopen ports of entry from Mexico for cattle, bison and equine imports in phases as early as July 7, beginning with Douglas, Arizona, which it said is the lowest risk entry point due to its location and the “long history of effective collaboration” between officials in Sonora and USDA’s Animal and Plant Health Inspection Service. The southern U.S. border was closed to imports of the animals on May 11 for a second time this year due to Mexico’s New World screwworm situation, as the damaging pest was moving northward within the country. The port at Columbus, New Mexico, may reopen on July 14, followed by Santa Teresa, New Mexico, on July 21, Del Rio, Texas, on Aug. 18 and Laredo, Texas, on Sept. 15, USDA said. USDA will evaluate conditions after each reopening to ensure enhanced control measures are working. Mexico’s Ag Minister Julio Berdegue requested some of the deadlines for reopening be accelerated and Mexico said it will ban the movement of livestock without proof of inspection and treatment for screwworm from affected areas to central and northern Mexico starting July 7. The news comes just after cash cattle prices turned lower for the first time in several months. Sentiment has quickly shifted to bearish and price action reflected that today. The downturn in cash cattle and persistent strength has pushed packer margins deep into the black, according to Hedgersedge. Wholesale beef prices continue to show resilient strength, as Choice cutout climbed another quarter to $395.81 at midsession this morning, while Select climbed 92 cents to $385.02.
Technical analysis: August live cattle futures saw sustained selling pressure today, confirming the downtrend from the mid-June high. Bears are not out of the woods yet though, as cattle bulls have shown resilient strength on pullbacks in the past couple months. Bulls are seeking to hold support at $210.10, the 40-day moving average, on continued selling. That is reinforced by last week’s low of $207.70. Resistance stands at $211.75 on a bounce, with additional strength looking to overcome yesterday’s high of $214.525.
August feeders opened sharply lower this morning and traded in a wide range, though ultimately closed near where they opened. Bulls retain the technical advantage at present. Additional weakness has bears looking to close prices below the 20-day moving average at $305.05. Additional weakness would eye last week’s low of $300.05. Resistance stands at $305.90 then today’s high of $308.40 on a bounce.
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 July, with half of your needs for August, September, October, November and December covered in cash. For corn, you have all needs through August covered in the cash market, with half of your needs for September and October covered in cash.