Hogs
Price action: July lean hog futures closed 52.5 cents higher at $112.175 and near mid-range.
Fundamental analysis: Hog futures again made contract highs today but saw additional consolidation as futures remain overbought on the daily bar chart. The downside in the pullbacks the last couple days has been limited as robust strength in cash fundamentals continues to underpin futures. The CME lean hog index is up another $1.25 to $104.95 as of June 16, marking the largest daily gain of the ongoing seasonal rally. The preliminary calculation puts the index up another $1.39 to $106.34, which would again be the largest daily gain of the ongoing climb. That would also be the highest quote for the index since August 2022. While gains in pork cutout have underpinned much of the strength in the cash hog market recently, cutout pulled back at midsession. Cutout sunk $2.42 to $117.42 this morning, led by sharp losses in butts, hams and loins. Movement was weak this morning as well, disappointing considering sharply lower prices. How cutout reacts this afternoon and Friday (tomorrow gov’t offices are closed) will be key.
Technical analysis: July lean hogs saw action on either side of unchanged today. Bulls continue to maintain full control of the near-term technical advantage. Resistance comes in at $112.00 then the contract high of $112.90 on an extension higher. Consolidation has bulls seeking to hold support at $110.00, which is reinforced by the prior contract high at $109.625 then the 10-day moving average at $109.25.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You have all of your soymeal and corn-for-feed needs covered in the cash market through July. You also have half of your soymeal needs for August, September and October covered in cash.
Cattle
Price action: August live cattle rose $1.025 to $211.675, near the daily high. August feeder cattle rose 82 1/2 cents to $304.175, near the session high after hitting a two-week low early on.
Fundamental analysis: The cattle bulls worked to stabilize their markets today, following sharp losses on Tuesday that were mostly due to speculator profit-taking pressure. Risk appetite in the general marketplace that is not robust did limit the upside in live and feeder cattle futures today.
Cash and beef market fundamentals are still strong, which should keep a floor under futures prices, especially since the nearby cattle futures hold steep discounts to the cash cattle market. Light cash cattle trading has taken place so far this week, with USDA reporting steers fetching an average price of $235.36 and heifers averaging $230.27. Last week’s average cash cattle trading price was $238.68. More active cash cattle trading may occur later Friday, following the afternoon USDA monthly Cattle-on-Feed report, which is expected to show lower placements, marketings and on-feed numbers. The noon report today showed wholesale boxed beef values continued to rise, with Choice-grade up $2.18 to $388.69, while Select-grade gained $2.48 to $375.02. Movement at midday was 57 loads. The Choice-Select spread is presently $13.67.
Technical analysis: Live and feeder cattle futures bulls still have the firm overall near-term technical advantage, but have faded a bit recently. 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 $205.00. First resistance is seen at $213.00 and then at $215.00. First support is seen at this week’s low of $210.075 and then at $209.00.
The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at the contract high of $314.20. The next downside price objective for the bears is to close prices below solid technical support at the May low of $293.05. First resistance is seen at $305.00 and then at $307.00. First support is seen at today’s low of $301.10 and then at $300.00.
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: You have all of your soymeal and corn-for-feed needs covered in the cash market through July. You also have half of your soymeal needs for August, September and October covered in cash.