Hogs
Price action: June lean hog futures fell $0.40 to $103.725, near mid-range and hit a two-week low. For the week, June hogs were down $0.75.
5-day outlook: The lean hog futures market today saw a technically bearish weekly low close, which sets the table for follow-through chart-based selling pressure from the speculators early next week.
The latest CME lean hog index is down 1 cent to $90.39. Monday’s projected cash index price is down another penny at $90.29. The national direct five-day rolling average cash hog price quote for today is $68.37. The noon report today showed pork cutout value up $1.65 at $99.03, led by gains in butts and ribs. Movement at midday was good at 215.51 loads.
30-day outlook: Losses in the CME lean hog index ended recently as traders look to stay mostly on par with expiring April futures. However, the heavier-volume June contract has faced greater volatility. The cash index should begin to edge higher after the April contract is settled, which may coincide with wholesale support amid ramped up grilling demand and waning seasonal slaughter.
90-day outlook: If the war in the Middle East resumes after ceasefire talks and becomes a quagmire, U.S. consumer confidence would be dented by higher gasoline prices and a wobbly stock market. While not a desired outcome, such would likely be extrapolated into consumers opting for the more economical pork cuts (versus beef) at the meat counter. The substitution demand would work to lift pork and hog prices.
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 should have all your soymeal needs covered through April in the cash market. You should also have corn-for-feed needs purchased through April. Be prepared to make additional purchases.
Cattle
Price action: June live cattle futures rose $2.00 to $249.20, near the daily high, hit a contract high and for the week up $2.875. May feeder cattle futures gained $1.925 to $372.35, nearer the session high, hit a 5.5-month high and for the week up $1.725.
5-day outlook: The live cattle and feeder cattle futures markets once again finished this week strong, including technically bullish weekly high closes that suggest follow-through buying strength early next week. Technical buying was featured again today. Cattle bulls were also encouraged by higher cash cattle trading so far this week.
USDA at midday today reported very light cash cattle trading so far this week, with steers averaging $245.58 and heifers $245.53. The agency earlier this week reported cash trading last week averaged $244.96. The noon report today showed wholesale boxed beef cutout values firmer. Choice-grade was up $0.59 at $381.68, while Select-grade gained $2.18 to $383.75. Movement at midday was light at 37 loads. The Choice-Select spread at midday today was minus $2.07.
30-day outlook: Cash cattle prices are trending higher again, with nearby futures this week hitting a record high. Tight supplies in feedlots will continue to favor feedlot operators in cash negotiations in the coming weeks, especially with the outdoor grilling season on the doorstep.
90-day outlook: The fly in the bullish cattle and beef markets ointment is the war in Iran and its economic consequences in the coming months. If significantly higher gasoline prices persist, such would likely curtail consumer demand for beef at the meat counter. USDA has hinted of a possible limited reopening of the U.S.-Mexico border and cattle traders will continue to monitor that situation. Meanwhile, the drought monitor continues to show signs of stress throughout the central and northern Plains, which sets the stage for wildfire and cattle herd rebuilding risks.
What to do: Cover corn-for-feed needs through April in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you have full coverage in cash through April. You have corn-for-feed needs covered through April as well. Be prepared to make additional purchases if value prices continue.