Hogs
Price action: August lean hogs rose $1.00 to $107.10, nearer the session high. The August contract has moved to a slight premium to the nearby July futures.
Fundamental analysis: The lean hog futures market saw some short covering and corrective buying from the speculators after August hog futures prices hit a five-week low early on today. Today’s gains came despite weakening cash hog and wholesale pork market fundamentals. Solid gains in the cattle futures markets today also spilled over into buying interest in hog futures.
The latest quote for the CME lean hog index is down another 71 cents to $109.51 as of July 2, the fourth straight daily decline. Tuesday’s cash quote is projected down another $1.18 to $108.33. The national direct five-day rolling average cash hog price quote today is $111.15. The noon report today showed pork cutout value rose $4.89 to $115.10, led by a more-than-$13 gain in bellies. Movement at midday was decent at 141.48 loads.
Technical analysis: Lean hog futures bulls 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 $102.00. First resistance is seen at $108.00 and then at $109.00. First support is seen at today’s low of $105.50 and then at $104.00.
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 rose $1.85 to $215.90, nearer the daily high and hit a three-week high. August feeder cattle gained $4.225 to $313.725, near the session high and hit a contract high.
Fundamental analysis: Once again the live and feeder cattle futures markets have made strong rebounds from their recent lows and are set to challenge or push above the contract highs. The big discounts live cattle futures hold to the cash cattle market continue to limit seller interest and prompt speculators to the long side of live cattle futures.
The gains in futures are coming despite fading cash cattle and beef market fundamentals. Cash cattle last week traded lower for a third straight week, but just down an average of 8 cents at $229.43, which was less than the trade expected. Cash cattle sources expect cash prices to continue to weaken this week. However, packer margins in the black could prompt the packers to be better bidders for cash cattle later this week. The noon report today showed wholesale boxed beef values higher, with Choice-grade up $1.25 to $391.00, while Select-grade rose $2.57 to $381.01. Movement at midday was light at 42 loads.
Technical analysis: Live and feeder cattle futures bulls have the firm overall near-term technical advantage. The next upside price objective for the live cattle bulls is to close August futures above resistance at the contract high of $220.05. The next downside technical objective for the bears is closing prices below solid technical support at the June low of $207.70. First resistance is seen at $217.00 and then at $218.00. First support is seen at $214.00 and then at $213.00.
The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at $317.50. The next downside price objective for the bears is to close prices below solid technical support at $300.00. First resistance is seen at today’s contract high of $314.60 and then at $316.00. First support is seen at $312.00 and then at $310.00.
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.