Hogs
Price action: August lean hog futures rose $1.375 to $101.65, nearer the daily high, hit a seven-week high and for the week up $2.65.
5-day outlook: The lean hog futures market saw more technical buying interest from the specs today amid charts that are turning more bullish as prices are in a solid uptrend on the daily bar chart.
The USDA noon pork showed cutout value was up $2.85 at $105.27, led by gains in butts and hams. Movement at midday was 178.26 loads. The latest CME lean hog index is up 50 cents to $95.10. Monday’s projected CME index price is up 55 cents at $95.65. The national direct five-day rolling average cash hog price quote for today is $99.80.
30-day outlook: Wholesale and cash hog fundamentals have turned supportive, led by rising cash hog prices and BLT-season strength in bellies. Seasonally declining slaughter levels in the coming weeks would continue to provide near-term price support for cash and futures.
90-day outlook: Lean hogs have scored healthy gains since the June 10 low. Tighter summer marketings and weakening slaughter volumes have been primary drivers. Hog and cattle futures have diverged notably as pork demand has held up compared to beef. Pork remains more affordable at the meat counter, supporting steady consumer interest in the coming months as high beef prices weigh on consumers, especially with gasoline prices on the rise again.
What to do: Get current with feed coverage.
Hedgers: You have 50% of Q2 production hedged with all remaining 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 fell $2.65 to $224.425, near the daily low, hit a four-month low and for the week down $10.775. August feeder cattle futures lost $0.65 to $345.95, near mid-range, closed at a five-week low close and for the week down $8.65.
5-day outlook: The cattle futures markets saw still more technical selling today as the bleeding continues. The technically bearish weekly low closes on a Friday again this week set the stage for follow-through chart-based selling early next week. Lower cash trade so far this week also hit futures prices.
Cash cattle trading turned very active as of midday today, with USDA reporting steers averaging $238.59 and heifers $238.16. That is well down from last week’s USDA-reported cash cattle trading average of $248.01. The noon report today showed higher boxed beef prices, with Choice grade up $0.31 at $368.69 and Select grade up $0.66 at $356.35. Movement at midday was 74 loads. The Choice-Select spread is presently plus $12.34.
30-day outlook: Live cattle futures prices have dropped more than $20 in under a month. The multi-year bull market has paused as elevated prices have somewhat dented consumer demand, giving packers greater leverage in cash negotiations. Boxed beef values have weakened in tandem, modestly improving packer margins amid lighter summer demand. Market participants remain cautious, awaiting the next trove of data in the upcoming Cattle on Feed and Cold Storage reports, as well as the semiannual cattle report next Friday, which will detail the mid-year inventory of all cattle and calves, including beef and dairy cows, as well as the calf crop for the year.
90-day outlook: On the supply side, the sharp decline in cash trade recently has further limited buyer interest in futures, despite historically tight fed cattle supplies. The stock market has been wobbly of late and gasoline prices have up-ticked along with crude oil following increasing military action in the Middle East. These are potentially bearish elements for the demand side of the equation for beef demand at the meat counter. The New World screwworm threat and detected cases in the U.S. creeping up may also psychologically damage consumer confidence in buying beef.
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.