Hogs
Price action: June lean hogs fell $1.425 to $97.575, nearer the daily low and hit a three-week low.
Fundamental analysis: The lean hog futures market saw profit-taking pressure from the speculators and also some chart-based selling as the near-term technical posture for hogs took a turn south today. Hog traders took note of a comment from President Trump in the Oval Office today. While sitting with the Canadian prime minister, Trump was asked about U.S. trade deals and specifically with China. Trump said he has not spoken to Chinese officials on the trade situation. China has been a major importer of U.S. pork.
The latest CME lean hog index is up another 18 cents to $89.87 as of May 2, the 13th consecutive daily gain. Wednesday’s projected cash index is up another 26 cents to $90.13. The national direct five-day rolling average cash hog price quote today is $92.61. The noon report today showed pork cutout value rose 73 cents to $97.39, led by gains in bellies. Movement at midday was decent at 178.87 loads.
Technical analysis: Lean hog futures bulls still have the overall near-term technical advantage. However, a price uptrend on the daily bar chart has been negated with today’s price pressure. The next upside price objective for the hog bulls is to close June prices above solid chart resistance at the April high of $101.975. The next downside price objective for the bears is closing prices below solid technical support at $93.00. First resistance is seen at $98.625 and then at this week’s high of $100.30. First support is seen at today’s low of $97.05 and then at $96.00.
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 inched 2.5 cents higher to $213.675 and closed near mid-range. August feeders climbed 30 cents to $299.0 and settled nearer session highs.
Fundamental analysis: Cattle futures languished near contract highs today as traders await direction from the cash market. Cash trade got an early start to the week as trade in Kansas got kicked off at $218.23. While that is down from the five-area average from last week, it is above last week’s average in Kansas. Not only is it above last week’s Kansas average, it is for lower quality animals than what traded hands last week. So not only is it a higher price, it is for less quality beef, extenuating the strength of the cash cattle market at this juncture. Still, traders are wary of pushing cattle futures higher as a downturn in the cattle market could be near at hand. Packers have increased purchases of animals in the last few weeks and contracted supplies are available. That could lead to light negotiations this week, especially considering margins remain deep in the red. Margins remain deeply red despite persistent strength in pork cutout, as Choice beef is up another 60 cents to $344.17, though that does remain below last week’s high. Select rose $5.51 this morning to $333.58, which is second only to the Covid driven highs of 2020.
Feeder cattle futures continue to trade near recent highs tough were modestly weaker than fats today. That is likely due in part to a sinking feeder cattle index, which plunged $2.98 to $293.40 in the most recent quote, falling sharply from the May 1 all-time high.
Technical analysis: June live cattle futures saw action on either side of unchanged today, though bulls maintain full control of the technical advantage. Additional buying eyes resistance at today’s contract high of $214.325, which is reinforced by the psychological $215.00 mark. Support comes in at $212.00 then $210.75 on a reversal lower. Additional selling eyes support at the 10-day moving average at $209.85.
August feeder cattle futures continue to trend higher as bulls retain the technical advantage. Resistance stands at today’s contract high of $299.90, which coincides with the psychological $300.00 mark. Support comes in at $297.80 then the 10-day moving average at $295.50 on profit-taking.
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.