Hogs
Price action: June lean hogs fell $1.55 to $99.45, near the daily low.
Fundamental analysis: The hog futures market today saw profit-taking pressure from recent gains that saw prices Monday hit a nine-week high. Worries about China demand for U.S. pork amid the U.S.-China trade war also prompted some selling interest.
The latest CME lean hog index is up another 64 cents to $88.18 as of April 25, the eighth straight daily gain. Wednesday’s cash index is projected up 60 cents at $88.78. The national direct five-day rolling average cash hog price quote today is $91.62. The noon report today showed pork cutout value up 30 cents to $97.92, led by strength in ribs. Movement at midday was good at 175.86 loads.
Smithfield Foods posted higher first-quarter sales and profit, boosted by strong demand for its packaged meats and pork businesses.
Technical analysis: Lean hog futures bulls still have the overall near-term technical advantage as prices are trending up on the daily chart. The next upside price objective for the hog bulls is to close June prices above solid chart resistance at the contract high of $106.35. The next downside price objective for the bears is closing prices below solid technical support at $95.00. First resistance is seen at today’s high of $101.275 and then at this week’s high of $101.975. First support is seen at $99.00 and then at $98.00.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You should have all corn-for-feed needs covered in the cash market through May. You also have all soymeal needs covered in the cash market through May.
Cattle
Price action: June live cattle futures climbed 60 cents to $210.20 and closed near mid-range. August feeder cattle futures surged $1.95 to $296.90 and closed nearer session highs.
Fundamental analysis: Cattle futures posted modest gains today as the recent rally is slowing given overnight bought conditions across the marketplace. Cattle and feeders both rallied despite relatively bearish news that the U.S./Mexico border will remain open as an agreement was made to continue cattle imports into the U.S. After last week’s record five-area average for cash cattle prices on fairly low movement, it is unlikely that a downturn will come soon, much to packers dismay. Some contracted supplies will become available this week given the turn of the calendar, but near-term supplies remain tight which will likely continue to lift cattle prices. Cash trade is abysmal to start the week, as expected, with trade likely being pushed late into the week as packers actively try to manage margins that remain deep in the red.
Choice beef is making fresh highs as Choice cutout is trading hands at the highest level in nearly two years. Choice was up another $3.42 to $346.19 at midsession today, though Select slipped 31 cents to $324.81.
After dipping late last week, the feeder cattle index surged to fresh all time highs early this week. The index is up $3.83 to $293.71. The strength in the cash market spilled over into futures today, helping maintain solid gains across the complex.
Technical analysis: June live cattle futures climbed to fresh contract highs today as bulls maintain the technical advantage. Prices are near-term overbought, which could yield some profit-taking in the next few days, but underlying fundamentals remain strong. Support comes in at $208.10 then $207.725 on corrective selling, which is reinforced by support at the 10-day moving average at $206.40. Bulls are looking to overcome the contract high of $210.975 for tackling resistance at $212.50 on a continuation higher.
August feeder cattle futures climbed to fresh contract highs today in an impressive show of strength. Bulls maintain full control of the technical advantage and are looking to challenge stiff psychological resistance at $300.00. Additional resistance lies at $297.80 on the way. Support comes in at $295.00 then $293.70 on corrective selling.
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: You should have all corn-for-feed needs covered in the cash market through May. You also have all soymeal needs covered in the cash market through May.