Hogs
Price action: December lean hog futures rose 42 1/2 cents to $78.50, near mid-range and for the week down 90 cents.
5-day outlook: The lean hog futures market today saw some short covering after prices hit a nearly four-month low Thursday. However, December lean hogs remain in a price downtrend and the chart-based speculative bears will probably be looking to play the short side next week. Eroding cash hog prices will also favor the hog bears until the cash market turns around. Lean hog futures’ present discounts to the cash index will work to limit selling interest in hog futures in the near term.
The latest CME lean hog index is down another 30 cents to $88.83. Monday’s projected cash index price is down another 89 cents to $87.94. The national direct five-day rolling average cash price today is $83.23—down over $1.00 from last Friday’s quote. The noon report today showed pork cutout value up $4.68 to $99.94, led by across-the-board gains in cuts. Movement at midday was decent at 235.94 loads.
30-day outlook: Thanksgiving is right around the corner. Retailers are likely ramping up their demand for pork and will be doing more ham features as many consumers may choose to forego more expensive beef cuts and buy hams.
90-day outlook: Recent U.S. trade deals, including more this week, have hog producers hopeful for better global demand for U.S. pork in the coming months. China is a major pork importer, and U.S-China relations are presently on the upswing. That’s a positive for the hog and pork futures markets.
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 your soymeal needs covered through December in the cash market. For corn, you now have all needs through November covered in the cash market.
Cattle
Price action: December live cattle futures rose 15 cents to $219.15, nearer the daily high after hitting a four-month low early on. For the week, December live cattle were down $2.20. January feeder cattle futures closed up $2.10 at $320.55, near the daily high and hit a four-month low early on. For the week, January feeders were up 97 1/2 cents.
5-day outlook: The cattle futures markets today saw recoveries from their four-month lows set in early trading, to post high-range daily closes. This suggests the bears are now exhausted and may have played out their technical selling pressure. However, more price gains will be needed next week to better suggest near-term market bottoms are finally in place.
Active cash cattle trading this week sees USDA reporting at midday steers fetched an average price of $225.35 and heifers $225.29. That compares to last week’s average cash cattle trade at $228.70. The noon report today showed boxed beef cutout values down, with Choice-grade down $2.89 to $370.68, while Select-grade was down 50 cents to $354.53. Movement at midday was good at 99 loads. The Choice-Select spread is presently $16.15.
30-day outlook: There are lingering bearish elements in the marketplace at present, which may continue to squelch the cattle market bulls in the coming weeks. On Thursday the White House said the U.S. and Argentina have improved their bilateral trading terms for beef. This comes as the Trump administration is grappling with consumer notions that are now apparently more focused on “affordability” of U.S. products. Also, late this week the marketplace has changed its tone on a Fed rate cut next month. Following some hawkish comments from Fed officials late this week, the marketplace now sees a U.S. rate cut by the FOMC on Dec. 10 as no better than 50-50.
90-day outlook: Cattle producers and traders need to keep in mind that U.S. consumer demand for beef at the meat counter remains solid, which should keep a floor under cash cattle prices, support wholesale boxed beef values and ultimately packer margins. Consumer confidence will be an important element for cattle markets in the coming months. Good consumer confidence in recent months has meant better demand for beef. The upcoming onslaught of U.S. economic data releases, as the U.S. government has reopened, will help guide consumers on their budget plans in the coming months, and influence their confidence.
What to do: Cover your corn-for-feed needs in the cash market through November.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you have full coverage in cash through December. For corn, you have all needs through November covered in the cash market. Be prepared to make additional purchases if value prices continue.