Hogs
Advice: We advise livestock producers to cover half of your soymeal needs for August, September and October in the cash market. You already have all of your soymeal needs for the remainder of June and all of July covered in the cash market.
Price action: June lean hogs expired at noon today a nickel higher. June futures closed 57.5 cents higher and near session highs, marking a $2.375 gain on the week.
5-day outlook: July hog futures traded sharply lower early on today before eventually rebounded and closing near session and contract highs. Strength in the cash market continues to underpin futures as traders anticipate strength will persist through the summer months. Today’s reversal off uptrend support signified the strengthe of the recent rally that will likely continue over the course of the next week. Some consolidation is possible as futures are overbought, but as the cash market has remained strong, traders have seemingly ignored the overbought nature of the futures markets. Some sideways consolidation would ultimately be healthy for the market.
30-day outlook: The CME lean hog index continues to post strong gains, driving nearby futures higher. The index is up another 84 cents to $101.75 as of June 11. The preliminary calculation puts the index up another $1.05 to $102.81 on Monday, which would be the second largest gain of the ongoing seasonal rally. Gains in the index have fueled strength in nearby futures, a sharp contrast to how prices were trading just a month ago. This shift is tied with the overall sentiment of the marketplace. Hog futures bottomed around the same time as stock futures bottomed in early April. The two closely tracking one another is a testament to the market’s belief that a stronger U.S. market will lead to additional meat counter demand over the course of the summer, which helps explain the strength seen in the July and August contracts. At this juncture, the market appears to be trading domestic demand, which is likely to continue to support prices over the coming month.
90-day outlook: Gains in pork cutout have been impressive this week as wholesale pork continues to climb to the highest mark in nearly two years. Cutout rose another $2.93 at midsession today to $117.43. Not only were prices strong, but movement surged to 246.74 loads, surpassing the prior two days totals for the entire day. Gains in hams and loins led cutout higher, but all cuts except butts saw gains this morning. The persistent strength in cutout affirms our belief that grocers are gearing up for pork features over the course of the next month, which should continue to support hog futures, especially considering beef prices are at record highs.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: NEW ADVICE -- Cover half of your soymeal needs for August, September and October in the cash market. You already have all of your soymeal and corn-for-feed needs for the remainder of June and all of July covered in the cash market.
Cattle
Advice: We advise livestock producers to cover half of your soymeal needs for August, September and October in the cash market. You already have all of your soymeal needs for the remainder of June and all of July covered in the cash market.
Price action: August live cattle futures fell $4.50 to $212.45 and near the daily low. On the week, August cattle fell $6.425. August feeder cattle futures lost $4.825 at $306.425 and near the session low. For the week, August feeders fell $3.725.
5-day outlook: The cattle futures markets today saw heavy profit-taking pressure after hitting record highs earlier in the week. Risk-off attitudes in the general marketplace following the Israeli attacks on Iran prompted much of the price pressure in cattle futures. Watch the U.S. stock indexes extra closely early next week. Keen risk aversion and resulting lower stock indexes would likely continue to put price pressure on the cattle markets. Today’s technically bearish weekly low closes in live cattle and feeder cattle futures markets are one chart clue that the markets have put in near-term price tops. Next week’s data point of the week for cattle traders will be Friday afternoon’s USDA cattle-on-feed report, which will likely show continued historically low numbers of cattle on U.S. feedlots. Steep discounts the live cattle futures market hold to the cash market should limit the downside in futures next week.
30-day outlook: Cash cattle and beef market fundamentals remain historically strong, to suggest more price upside cash cattle, boxed beef and cattle futures prices in the coming weeks—if the Israel-Iran conflict does not continue to escalate to possibly involve the U.S and other countries and in turn severely damage consumer confidence.
USDA reported steers and heifers have averaged around $236.75 late this week. That’s just above last week’s USDA-reported average cash cattle trade at a record high of $236.62. The noon report today showed wholesale boxed beef values continue to rise. Choice cutout rose another 35 cents to $377.07, while Select gained 78 cents to $363.85. Cutout values have pushed to the highest levels since the 2020 Covid-driven spike. Movement at midday today was 61 loads. The Choice-Select spread is presently $13.22.
90-day outlook: A rise to record highs in the feeder cattle index are indicative traders anticipate a prolonged closure of the U.S. southern border to cattle imports, which would exacerbate the current tight-supply situation into the coming months. Grilling season will peak out in July, which may finally put in major tops in the cattle markets. Again, heading into late summer the state of the U.S. economy as indicated by the stock market will be key to whether or not consumers are confident and continuing to come to the meat counter looking for beef, despite the historically high beef prices.
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: NEW ADVICE -- Cover half of your soymeal needs for August, September and October in the cash market. You already have all of your soymeal and corn-for-feed needs for the remainder of June and all of July covered in the cash market.