Hogs
Price action: August lean hog futures rose $1.375 to $98.975, near the daily high and hit a six-month low early on.
Fundamental analysis: The lean hog futures market saw short covering and perceived bargain hunting amid a steep price downtrend in place on the daily bar chart. The market had become technically oversold on a near-term basis. Near-term charts remain bearish, although good follow-through buying on Wednesday would suggest the bears have become exhausted.
The latest CME lean hog index is up 11 cents at $91.51. Wednesday’s projected cash index price is up 29 cents at $91.65. The national direct five-day rolling average cash hog price quote today is $94.26. The noon report today showed pork cutout value up $2.53 at $102.28, led by big gains in bellies. Movement at midday was decent at 173.25 loads.
Technical analysis: August lean hog futures bears have the solid overall near-term technical advantage. Prices are in a steep downtrend on the daily bar chart. The next upside price objective for the hog bulls is to close June futures prices above solid chart resistance at $102.50. The next downside price objective for the bears is closing prices below solid technical support at the November low of $93.675. First resistance is seen at $99.00 and then at $100.50. First support is seen at $97.00 and then at today’s low of $96.175.
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 are now hand to mouth for feed needs.Be prepared to make additional purchases.
Cattle
Price action: August live cattle fell $0.95 to $239.65, nearer the daily high. August feeder cattle lost $3.125 to $348.425, nearer the daily high but closed at a nine-week low close.
Fundamental analysis: The cattle futures markets today saw renewed technical selling pressure as both markets are in downtrends on their daily bar charts.
New World Screwworm was found in Mexico within 25 miles of the U.S. border, USDA Secretary Rollins said today. The detection of the parasite in a five-year-old goat in Mexico’s Coahuila state “further increases the threat facing the U.S. beef industry and cattle ranchers,” said a Reuters report. This is the closest confirmed case to the U.S. border during the most recent outbreak, Rollins said.
USDA at midday today reported very light cash cattle trading at $255.00. Last week’s average cash trading price was $256.86-- down $3.63 from the prior week’s average. The noon report today showed wholesale boxed beef cutout values higher. Choice-grade was up $0.98 at $393.81, while Select-grade gained $0.73 to $383.82. Movement at midday was good at 76 loads. The Choice-Select spread at midday today was plus $9.99.
Technical analysis: Live and feeder cattle futures bulls still have the overall near-term technical advantage but fledgling downtrends are in place on their daily bar charts. The next upside price objective for the live cattle bulls is to close August futures above resistance at the contract high of $251.65. The next downside technical objective for the bears is closing prices below solid technical support at $230.00. First resistance is seen at last week’s high of $243.875 and then at $245.00. First support is seen at the May low of $236.825 and then at $235.00.
The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at $366.125. The next downside price objective for the bears is to close prices below solid technical support at the May low of $344.275. First resistance is seen at today’s high of $350.35 and then at this week’s high of $353.75. First support is seen at $344.725 and then at $342.00.
What to do: You are hand to mouth for feed needs. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You are now hand to mouth for feed needs. Be prepared to make purchases if value prices continue.