Hogs
Price action: October lean hog futures fell $0.975 to $78.225, near the daily low and for the week up 12 1/2 cents.
5-day outlook: The hog futures market saw more technical selling pressure today as prices remain trapped in a downtrend on the daily bar chart.
The USDA noon pork report today showed cutout value was down $0.21 at $85.89, led by losses in ribs and hams. Movement at midday was 179.33 loads. The latest CME lean hog index is down 27 cents to $82.20. Monday’s projected CME index price is down $0.44 at $81.76. The national direct five-day rolling average cash hog price quote for today is $79.84.
30-day outlook: Lean hog futures prices are not far above their lowest levels in more than a year as wholesale pork values recently dropped to multi-year lows. Hog slaughter is above year-ago levels and average hog weights have edged higher, leaving the market with ample pork supplies. These are bearish fundamental headwinds that will continue to limit the upside in lean hog futures in the coming weeks.
90-day outlook: U.S. pork exports have been decent but have not been strong enough to stabilize cash and futures prices. However, bullish hog traders can still argue historically elevated retail beef prices suggest improved substitution demand for more economical pork cuts—especially with retail gasoline prices above $4.25 a gallon and the Federal Reserve expected to raise interest rates again before the end of this year.
What to do: Get current with feed coverage.
Hedgers: You currently have all risk in the cash market.
Feed needs: You have corn-for-feed and soymeal needs covered through September in the cash market. Be prepared to make purchases if value prices continue.
Cattle
Price action: October live cattle futures fell $0.20 to $218.875, near mid-range and for the week up $2.95. November feeder cattle futures rose $3.90 to $331.975, nearer the daily high and for the week up $13.975.
5-day outlook: The cattle futures markets traded mixed today, with live cattle seeing buying interest limited by slightly lower cash trade taking place so far this week. Technical buying was featured in feeders today.
USDA at midday today reported moderately active cash cattle trading late this week, with steers averaging $220.75 and heifers $220.61. The agency Monday reported average cash cattle trading last week at $221.87. The noon report today showed firmer boxed beef prices, with Choice grade up $1.97 at $378.09 and Select grade up $3.15 at $355.25. Movement at midday was 73 loads. The Choice-Select spread is presently plus $22.84.
30-day outlook: Demand aided this week’s price gains, with firmer wholesale trade a sign packers can still sell higher-grading product. However, rising input costs, including record-high diesel and higher interest rates, will weigh on feedlot margins and bids for replacement cattle. While near-term supplies remain snug, traders will continue to weigh imports and consumer demand, which has been resilient in recent months.
90-day outlook: Live cattle and feeder futures rallied after USDA’s monthly cattle-on-feed report pegged August placements and marketings at a record low. Inventories were still up 1%, a sign yards are feeding cattle longer even as replacement supplies tighten. Under the report sits a long cycle that leans price-bullish in the coming months: a small beef cow herd, eight years of drought-forced liquidation, and a tight calf crop. Feeders are scarce, so feeder futures often lead when placements collapse.
What to do: You have corn-for-feed and soymeal needs covered through September 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 September in the cash market. Be prepared to make purchases if value prices continue.