Hogs
Price action: August lean hogs fell $1.275 to $107.25, near the daily low.
Fundamental analysis: The lean hog futures market today saw some profit taking and technical selling pressure today, as bullish momentum is waning a bit. However, hog futures’ discount to the CME lean hog index will limit the downside in futures.
The latest CME lean hog index is up another 4 cents to $110.32 as of July 25. Wednesday’s projected cash index price (as of July 28) is up 13 cents at $110.45. The national direct five-day rolling average cash hog price index quote today is $113.05. The noon report today showed pork cutout fell another 79 cents to $117.50, led by losses in picnics. Movement was 154.93 loads. Pork packer margins at present are slightly in the red.
Technical analysis: Lean hog futures bulls have the overall near-term technical advantage. Prices are still in a fledgling uptrend on the daily bar chart but the bulls need to show fresh power soon to keep it alive. The next upside price objective for the hog bulls is to close August prices above solid chart resistance at the contract high of $113.375. The next downside price objective for the bears is closing prices below solid technical support at $105.00. First resistance is seen at last week’s high of $108.90 and then at $110.00. First support is seen at last week’s low of $105.875 and then at $105.00.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: For soymeal, you have full coverage in cash through July, with half of your needs for August, September, October, November and December covered in cash. For corn, you have all needs through August covered in the cash market, with half of your needs for September and October covered in cash.
Cattle
Price action: August live cattle rose $1.85 to $229.725, near the session high and hit another contract/record high. August feeder cattle rose $2.675 to $336.20, near the daily high and also hit a contract/record high.
Fundamental analysis: The powerful bull market runs in cattle futures roll on, with no early, solid technical clues that market tops are close at hand. In fact, recent rallies that have been followed by “backing and filling” on the charts are bullish signals the price uptrends can continue. Live cattle futures discount to the cash cattle market will continue to limit the downside in cattle futures.
There has been no cash cattle trading activity reported by USDA yet this week. Beef packer cutting margins are still deep in the red at present, which will likely have packers reluctant to bid aggressively for cash cattle when trade does commence later this week. The noon beef report today showed Choice-grade cutout value down 88 cents at $366.85, while Select-grade dropped $4.33 to $342.52. Movement at midday was 61 loads. The Choice-Select spread is currently $24.33.
Technical analysis: Live and feeder cattle futures bulls have the solid overall near-term technical advantage. The next upside price objective for the live cattle bulls is to close August futures above resistance at $235.00. The next downside technical objective for the bears is closing prices below solid technical support at $222.00. First resistance is seen at the contract high of $229.90 and then at $231.00. First support is seen at this week’s low of $226.425 and then at $225.00.
The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at $340.00. The next downside price objective for the bears is to close prices below solid technical support at $320.00. First resistance is seen at the contract high of $336.70 and then at $338.00. First support is seen at this week’s low of $331.20 and then at $330.00.
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: For soymeal, you have full coverage in cash through July, with half of your needs for August, September, October, November and December covered in cash. For corn, you have all needs through August covered in the cash market, with half of your needs for September and October covered in cash.