Hogs
Price action: February lean hog futures rose 47 1/2 cents to $88.275, nearer the session high and hit a three-month high. For the week, February hogs rose $2.975.
5-day outlook: The lean hog futures market today saw technical buying amid firmly bullish technicals and an improvement in the cash hog and CME lean hog index prices late this week. Lean hog futures’ premium to the CME lean hog index remains a positive element for the futures market, suggesting hog traders expect the cash market to continue to improve.
The latest CME lean hog index is up 11 cents to $80.50. Monday’s projected cash index price is up another 50 cents to $81.00. The noon report today showed pork cutout value up 10 cents to $93.70. Movement at midday was 154.21 loads.
30-day outlook: Still historically elevated beef prices at the meat counter are likely to continue to see better substitution demand for pork at the meat counter. Such will likely continue to support the cash hog and lean hog futures markets by at least keeping a floor under prices.
90-day outlook: A rebound in pork cutout value may be coming soon as both processors and retailers shore up ham supplies ahead of the Easter holiday, which falls early this year. As with cattle and beef, lofty consumer demand should continue to support to hog/pork sector, especially as hog supplies and slaughter rates ease toward annual lows in early summer.
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 March in the cash market. You should also have corn-for-feed needs purchased through February. Be prepared to make additional purchases.
Cattle
Price action: February live cattle futures fell $3.90 to $232.15, near mid-range and hit a nearly three-week low. For the week, February live cattle fell $1.575. March feeder cattle futures lost $8.10 to $356.45, nearer the daily low. For the week, March feeders were up $1.75.
5-day outlook: Cattle futures traders were spooked today by reports of an additional case of New World screwworm in Mexico—seemingly worried about the northward movement of New World Screwworm and its potential impact on consumer demand for beef. Texas Agriculture Commissioner Sid Miller issued a warning to livestock producers after authorities in Mexico confirmed a NWS case just 215 miles south of the Texas border.
Today’s technically bearish low-range weekly closes in February live cattle and March feeders set the table for some follow-through, chart-based selling pressure early next week.
Still-very-quiet cash cattle trading late this week saw USDA today reporting steers averaging $234.45 and heifers averaging $233.72. Those numbers compare to last week’s average cash cattle trade reported by USDA at $231.86. The noon report today showed boxed beef cutout values firmer, with Choice-grade up $1.14 to $361.91, while Select-grade rose 59 cents to $360.20. Movement at midday was light at 53 loads. The Choice-Select spread is presently $1.61.
World Weather Inc. today said a dry-biased weather pattern will continue in the Plains states through at least next Wednesday and most of the region will see below-normal precipitation through the balance of this month. The temperature pattern will still be variable, which could stress some livestock.
30-day outlook: Retailers still anticipate strong consumer demand for beef in the coming months, despite historically high retail beef prices. Consumer confidence remains generally upbeat as recent U.S. economic data, while not robust, certainly does not signal storm clouds on the horizon.
90-day outlook: The Trump Administration’s recent revamping of the food pyramid drives home that demand for protein is here to stay. While tight fed cattle supplies initiated the current bull market, strong demand should continue to power prices, even as retail prices remain elevated. This may be exacerbated by declining slaughter rates over the coming weeks as packers adjust to plant closings and new adjusted slaughter rates in other plants. Select boxed beef values have recently topped Choice values as supplies for the latter make up around three quarters of all domestic fed beef, as quality remains high
What to do: Cover corn-for-feed needs through February 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 March. You have corn-for-feed needs covered through February as well. Be prepared to make additional purchases if value prices continue.