Hogs
Price action: August lean hog futures fell $2.575 to $98.35, near the daily low and hit a nearly six-month low. For the week, August hogs were down $1.725.
5-day outlook: The lean hog futures market sold off sharply today and was caught in the downdraft of sell-offs across the raw commodity sector today, sparked by this week’s sell off in the WTI crude oil futures market. Today’s technically bearish weekly and monthly low close sets the table for follow-through, chart based selling early next week. Bears are in firm technical control amid a price downtrend firmly in place on the daily bar chart.
The USDA noon pork cutout and movement data was not available as of this writing, likely due to computer problems at the agency. The latest CME lean hog index is up 34 cents to $90.92. The national direct five-day rolling average cash hog price quote for today was $94.19.
30-day outlook: Technical selling pressure and rising average carcass weights could continue to dampen buyer interest in the next few weeks. An increase in average carcass weights indicates producers are holding animals longer, contributing to larger pork supplies. However, the summer season may lead to some tightening in supplies as weights and slaughter wane seasonally. Meanwhile, the marketplace will closely monitor pork demand amid looming economic factors.
90-day outlook: While the prospects for an end to the U.S.-Iran war were better late this week, there is not yet a final deal to end the conflict. The two sides had reportedly been closer to a deal the past few weeks, only to have it fall apart. If gasoline prices at the pump remain averaging well above $4.00 a gallon at the pumps in the coming months, more and more consumers are likely to move their protein preferences to more pork and less beef. That scenario would work to lift hog and pork markets’ prices.
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 should have all your soymeal and corn-for-feed needs covered in the cash market through May. Be prepared to make additional purchases.
Cattle
Price action: August live cattle futures lost $1.95 to $239.05, nearer the daily low. For the week, August cattle were down 55 cents. August feeder cattle futures lost $4.60 to $348.425, nearer the daily low and for the week down $1.425.
5-day outlook: The sell off in crude oil futures this week, with WTI futures dropping below $87 a barrel at the daily low, pressured much of the raw commodity futures markets this week. Weak long liquidation was featured in the cattle futures markets to end the trading, as well as profit taking from those traders who had been long from trades placed at lower price levels a few months ago. Some new speculator short-selling was also likely entering the market late this week. Today’s technically bearish weekly and monthly low closes in August fats and feeders also suggests some follow-through chart-based price pressure early next week.
Due to likely computer problems at USDA, the daily midday boxed beef and cash cattle data was not available as of this writing.
30-day outlook: Live cattle and feeder futures bulls were mostly able to maintain composure following bearish-leaning April USDA cattle-on-feed data. The marketplace quickly reckoned that following its release that heavier placements were largely due to dry conditions forcing earlier moves into feedlots, while longer feeding periods led to larger inventories. Pasture and range-land conditions are the worst since 2022, which has led to heavy supplemental feeding, destocking pressure and elevated hay and feed costs. If this environment persists, it will exacerbate the lingering supply-strapped cattle landscape.
90-day outlook: Despite the overall still-bullish supply and demand fundamentals for the cash cattle and beef markets, cash and futures prices cannot continue to rise ad infinitum. Futures markets trading and price history shows traders tend to factor into futures prices all known supply and demand fundamentals well before those fundamentals ever fully play out. It could be that the bullish fundamentals in the cash cattle and beef markets at present will limit the downside in cash and futures. However, without a fresh bullish fundamental spark, we question whether cash and futures markets can keep moving into record-high territory.
What to do: Cover corn-for-feed and soymeal needs through May 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 and soymeal for feed needs covered in the cash market through May. Be prepared to make additional purchases if value prices continue.