Livestock Analysis | June 30, 2021

( )

Hogs

Price action: Hog futures ended mixed, with the expiring July contract gaining 50 cents to $107.475 per hundredweight and most-active August sliding 37.5 cents to $103.25.

Fundamental analysis: Hog futures are essentially caught between seasonally elevated cash values and bearish expectations for prices during the second half of the year. The preliminary figure for the CME Lean Hog Index came in at $112.13 today, which means the July futures settlement is discounted about $4.75 with 10 business days of trading before expiration on July 15. Ideas that surprisingly tight short-term hog supplies, as implied by a five-pound drop in average pig weights over the past month, as well as strong seasonal demand for several pork cuts, such as loins, ribs and bellies, will support prices through mid-July supported the nearby contract.

Midday pork carcass quotes rose $1.02 from yesterday, encouraging bulls somewhat. In contrast, traders anticipating a traditional mid-August surge in hog supplies, which is unlikely to run its course before mid-December, were much less likely to chase deferred prices higher. As is very often the case at this time of the year, the industry is trying to get a sense of the size of the summer-fall decline in cash prices.

Technical analysis: Although the most-active August contract is trading toward the lower end of its recent range, bulls would seem to hold the advantage at this point. August futures established solid chart support at the June 24 low of $96.50. A close below that point would seemingly open the door to a test of the $90 level. The recent bounce has carried prices back up to resistance associated with its 10-day moving average, now near $103. The intersection of its 20- and 40-day MAs in the $110 area could represent tough resistance. A push above that range would have bulls again targeting the contract high at $120.55.

What to do: Get current with feed advice. Be prepared to add to third quarter hog hedges and establish fourth-quarter coverage on a corrective price rebound.

Hedgers: You should have 25% of third-quarter production hedged in July hog futures at $95.375.

Feed needs: Cash coverage for meal stands at 100% for July, 75% for August, 75% for September and 25% for the fourth quarter. Cash coverage for corn needs stands at 100% for July, 50% for August and 50% for September.

 

Cattle

Price action: August live cattle rose 80 cents to $122.725 per hundredweight, while August feeder cattle fell $2.775 to $154.625.

Fundamental analysis: Feeder cattle futures tumbled to the lowest closing price in over two weeks after USDA’s unexpectedly low corn acreage estimate triggered a rally in corn futures. U.S. farmers planted an estimated 92.692 million acres to corn this year, USDA said earlier today in its Acreage Report. The lower-than-expected corn planting suggests corn supplies following this year’s harvest will be smaller, pushing up feeding costs for the cattle industry as it competes with exporters, ethanol producers and other corn users. June 1 corn stocks also came in on the light side of expectations.

Live cattle futures held largely within the range from the past week as traders waited for cash markets to develop. Early today, live steers in five top cattle areas averaged $121.84 per hundredweight, based on negotiated cash sales, USDA reported. By comparison, live steers averaged $124.98 yesterday and last week average $125.47. Boxed beef firmed slightly, with choice cutouts averaged $292.80 early today, up 46 cents from yesterday. Select fell $1.22.

Technical analysis: August feeder cattle’s close was the contract’s lowest since $154.60 on June 14. August live cattle reached a new high for the week at $123.40. Other upside levels to watch include last week’s high of $124.60. Support levels include the 20-day moving average around $121.03 and the June 21 reaction low at $120.50.

What to do: Get current with feed advice.

Hedgers: Carry all risk in the cash market for now.

Feed needs: Cash coverage for meal stands at 100% for July, 75% for August, 75% for September and 25% for the fourth quarter. Cash coverage for corn needs stands at 100% for July, 50% for August and 50% for September.

 

Latest News

H&P Report negative compared to pre-report expectations
H&P Report negative compared to pre-report expectations

Nearly every category topped the average pre-report estimates.

After the Bell | March 28, 2024
After the Bell | March 28, 2024

After the Bell | March 28, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

PF Report Reaction: Bullish USDA data for corn
PF Report Reaction: Bullish USDA data for corn

Corn planting intentions and March 1 stocks came in lower than expected.

Report Snapshot: USDA shows lighter-than-expected corn acres and stocks
Report Snapshot: USDA shows lighter-than-expected corn acres and stocks

USDA reported corn acres of 90.036 million acres for 2024 and March 1 stocks of 8.347 billion bu., both well below trade estimates. Soybean acres were slightly lower than expectations, while stocks were higher.