Hogs
Price action: October lean hog futures rose $0.50 to $82.225, near the daily high and hit a four-week low early on. For the week, October hogs were down $2.625.
5-day outlook: The lean hog futures market paused amid some mild short covering today but the bulls had a dreadful week. Technicals remain firmly bearish as prices are in a steep downtrend on the daily bar chart. Declining cash hog prices also favor the futures bears.
The USDA noon pork showed cutout value was up $2.19 at $101.45, led by gains across the board. Movement at midday was good at 233.20 loads. The latest CME lean hog index is down 29 cents to $96.66. Monday’s projected CME index price is down 36 cents at $96.30. The national direct five-day rolling average cash hog price quote for today is $99.37.
30-day outlook: The weakening CME lean hog index suggests a seasonal top in futures as summer demand softens and supplies typically build into fall. Lean hog futures have extended late-July weakness into early August, pressured by softer cash hog prices and mixed-to-weaker wholesale pork cutout values.
90-day outlook: Seasonal summer demand patterns, elevated hog weights earlier in the season and cautious packer margins continue to weigh on trader and producer sentiment. Heat across the Midwest could eventually slow weight gains and tighten supplies, but at present it appears weaker cash and cutout fundamentals may persist into the fall—especially with the cattle markets losing their bullish momentum.
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: October live cattle futures rose $0.35 to $225.275, near mid-range and for the week down $1.975. September feeder cattle futures rose $3.65 to $345.225, near the daily high and for the week up $3.125.
5-day outlook: The cattle futures markets in late trading today saw short covering to allow prices to finish above unchanged, after both markets earlier saw some follow-through technical selling from Thursday’s solid losses.
USDA at midday today reported active cash cattle trading, with steers averaging $235.22 and heifers $235.07. The agency Monday reported average cash cattle trading last week at $233.06. The noon report today showed firmer boxed beef prices, with Choice grade up $0.36 at $364.22 and Select grade up $1.35 at $351.13. Movement at midday was light at 31 loads. The Choice-Select spread is presently plus $13.09.
30-day outlook: Cash cattle and wholesale beef fundamentals have recently supported futures. However, both cash and box prices, along with overall production, continue to lag year-ago levels. High heat across the Plains has pressured the U.S. herd, as persistent heat has reduced cattle weights while also disrupting logistics by limiting loading, shipping and sales activity. Fed cattle supplies are expected to remain tight for the foreseeable future, though several factors such as demand seasonality and packer economics could limit the potential for new highs. Packer margins have improved but remain negative
90-day outlook: USDA’s recent cattle data suggest U.S. herd-rebuilding may finally be starting, but progress remains slow amid still-elevated heifer slaughter rates. On the supply side, historically tight fed cattle supplies are still working in favor of the cash and futures markets bulls. The stock indexes hitting record highs are good for upbeat consumer attitudes that could support better consumer demand for beef at the meat counter. However, retail gasoline prices are still elevated and if such remains the case, demand for beef could be crimped with gasoline prices around $4.00 a gallon at the pumps.
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.