Hogs
Price action: August lean hogs rose 72 1/2 cents to $108.475, near the daily high and hit a three-week high.
Fundamental analysis: The lean hog futures bulls continue to make a strong push north after scoring a near-term price bottom in mid-July. The hog bulls are enjoying spillover buying interest from record-setting price gains in the cattle futures markets.
The latest CME lean hog index is up another 39 cents to $108.59 as of July 21. Thursday’s projected cash index price (for July 22) is up 64 cents to $109.23. The national direct five-day rolling average cash hog price quote today is $112.94. The noon report today showed pork cutout value rose a penny to $118.16, with the lead gainers being ribs and bellies. Movement at midday was 159.15 loads.
Hog producers are concerned about a major heat wave that is consuming much of the central and southeastern U.S. and likely causing livestock stress for the next several days.
Technical analysis: Lean hog futures bulls have the overall near-term technical advantage. The next upside price objective for the hog bulls is to close August prices above solid chart resistance at $110.00. The next downside price objective for the bears is closing prices below solid technical support at $105.00. First resistance is seen at this week’s high of $108.05 and then at $109.00. First support is seen at this week’s low of $105.875 and then at $105.00.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: For soymeal, you have full coverage in cash through July, with half of your needs for August, September, October, November and December covered in cash. For corn, you have all needs through August covered in the cash market, with half of your needs for September and October covered in cash.
Cattle
Price action: August live cattle rose $2.05 to $227.025, near the session high and hit another contract/record high. August feeder cattle gained $3.25 to $331.525, near the daily high and hit a contract/record high.
Fundamental analysis: The live and feeder cattle futures markets bulls are keeping their pedal to the metal, with no solid, early technical clues that market tops are close at hand. That’s keeping the chart-based speculators active on the long sides of the markets.
Very light cash cattle trade has occurred so far this week, with steers averaging $240.00 and heifers $238.00, according to USDA. Packers don’t want to be too aggressive on their bids because of negative margins. Friday’s monthly USDA Cattle on Feed Report will likely push cash cattle negotiations late into the week. The noon report today showed Choice-grade boxed beef down $3.07 to $369.43, while Select rose11 cents to $348.05. Movement at midday was decent at 98 loads. The Choice-Select spread is presently $21.38.
Cattle producers in the Plains are closely monitoring a serious heat wave that will last several days and very likely put stress on their animals.
Technical analysis: Live and feeder cattle futures bulls have the solid overall near-term technical advantage. The next upside price objective for the live cattle bulls is to close August futures above resistance at $230.00. The next downside technical objective for the bears is closing prices below solid technical support at $220.00. First resistance is seen at the contract high of $226.975 and then at $228.00. First support is seen at today’s low of $224.625 and then at this week’s low of $222.85.
The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at $335.00. The next downside price objective for the bears is to close prices below solid technical support at $318.00. First resistance is seen at the contract high of $330.80 and then at $332.00. First support is seen at today’s low of $327.65 and then at $325.00.
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: For soymeal, you have full coverage in cash through July, with half of your needs for August, September, October, November and December covered in cash. For corn, you have all needs through August covered in the cash market, with half of your needs for September and October covered in cash.