Hogs
Price action: August lean hog futures rose $0.425 to $98.85, near mid-range and for the week down $4.00.
5-day outlook: The lean hog futures market today saw a mild corrective rebound but suffered strong losses Wednesday and Thursday that produced near-term technical damage to suggest a price top is in place. The cash hog market is also looking toppy.
The USDA noon pork showed cutout value was down $0.18 at $101.46, led by losses in hams. Movement at midday was decent at 215.31 loads. The latest CME lean hog index is down 1 cent to $98.44. Monday’s projected CME index price is down 21 cents at $98.23. The national direct five-day rolling average cash hog price quote for today is $101.14.
30-day outlook: The weakening CME lean hog index may signal a seasonal top as summer demand softens and supplies typically build into fall. The pork cutout has held above $100 but is losing momentum. Futures have corrected lower in response. Pork packer margins are under pressure from the softer wholesale market. Higher productivity and heavier carcass weights continue to support elevated production forecasts despite a modestly smaller breeding herd, keeping overall supplies adequate.
90-day outlook: As the U.S. stock market wobbles and gasoline prices remain elevated, to dent consumer confidence, pork remains a more economical choice at the meat counter, likely supporting continued steady consumer interest in the coming months as higher beef prices weigh on consumers, who are shelling out more for gasoline at the pump.
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 July in the cash market. Be prepared to make purchases if value prices continue.
Cattle
Price action: August live cattle futures rose $0.525 to $231.75, near mid-range, hit a two-week high and for the week up $4.50. August feeder cattle futures gained $1.55 to $348.025, near mid-range and for the week up $2.70.
5-day outlook: The cattle futures markets today saw more short covering and perceived bargain hunting from the speculators. This week’s price gains in the cattle futures markets, including today’s technically bullish weekly high closes, begin to suggest price bottoms are in place. The USDA Animal and Plant Health and Inspection Service (APHIS) on its NWS website is now reporting 43 total New World screwworm detected cases in the U.S. There are eight active cases, all in Texas.
USDA at midday today reported active cash cattle trading, with steers averaging $232.77 and heifers $230.13. The agency Monday reported average cash cattle trading last week at $230.48. The noon report today showed higher boxed beef prices, with Choice grade up $1.03 at $361.53 and Select grade up $5.82 at $347.15. Movement at midday was 51 loads. The Choice-Select spread is presently plus $14.38.
30-day outlook: USDA’s phased southern border reopening to Mexican feeder cattle initially pressured futures but traders quickly factored the matter into prices and moved on. Import volumes remain uncertain, as Mexico expanded processing capacity during the prolonged border closure. Hot, dry conditions across the Plains continue to limit pasture recovery and force additional culling in some regions, underscoring the structural vulnerability of U.S. beef supplies.
90-day outlook: USDA’s recent cattle data suggest U.S. herd-rebuilding efforts 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. However, the stock market has been wobbly recently and gasoline prices are still elevated. These are potentially bearish elements for the demand side of the equation for beef demand at the meat counter in the coming months.
What to do: You have corn-for-feed and soymeal needs covered through July 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 July in the cash market. Be prepared to make purchases if value prices continue.