Hogs
Price action: June lean hogs inched 2.5 cents higher to $98.05 and closed near mid-range.
Fundamental outlook: Hog futures saw action on either side of unchanged today as technical resistance continues to loom over the market. A general risk-off tone in the marketplace limited buyer interest as heavy selling in equity markets posed as a proxy for how the market is feeling about China heightening trade barriers, not only with the U.S., but anyone who the U.S. builds deals with to pressure China. The U.S. dollar index fell to fresh three-year lows today, rather concerning given the continued weakness that picked up around the turn of the calendar.
Cash hog prices continue to be supported by climbing pork prices, partially due to increased grocer demand for pork as the grilling season is picking up. Pork cutout climbed another 19 cents to $97.19 this morning, fueled by strength in ribs, picnics and hams. Cutout maintaining Friday’s $4.22 surge higher was impressive today and more significant than this morning’s price action alone. The CME lean hog index continues to see moderate strength, rebounding from weakness the last couple of weeks. The index is up a quarter to $85.46 as of April 17 while the preliminary calculation puts the index up another 25 cents to $85.71 tomorrow.
Technical outlook: June lean hogs opened higher but technical selling limited gains. Bulls and bears are on an overall level playing field. Resistance stands at the March 17 high of $99.70 which is quickly bolstered by the psychological $100.00 mark. Support at the 100-day moving average at $97.65 limited the downside today, while additional selling has bears eyeing support at $96.50, the 40-day moving average.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You have all corn-for-feed needs covered in the cash market through April. You have all soymeal needs covered in the cash market through May.
Cattle
Price action: June live cattle fell 32 1/2 cents to $203.75, nearer the session low after hitting a three-week high early on. May feeder cattle fell $1.325 to $285.525, near the session low and hit a three-week high early on.
Fundamental analysis: The cattle futures markets lost their early gains as the U.S. stock indexes melted down to start the trading week. If the risk aversion and anxiety in the general marketplace persists this week, buying interest in the cattle futures markets will be squelched.
USDA late last week estimated there were 11.638 million head of cattle in large U.S. feedlots (1,000-plus head) as of April 1, down 188,000 head (1.6%) from year-ago. Placements rose 5.1% during March, while marketings increased 1.1%. All three categories were close to market expectations, but still overall price-friendly for futures.
Sharply higher cash cattle trade last week did limit the downside in futures today. Last week’s cash cattle trade averaged $211.63, which is up $3.93 from the week prior. The noon report today showed wholesale boxed beef values higher, with Choice gaining $1.16 to $332.68, while Select rose $2.13 to $317.68. Movement at midday was light at 34 loads. The Choice-Select spread is currently at $15.00.
Technical analysis: Live and feeder cattle futures bulls have the firm overall near-term technical advantage as prices are not far below their recent record highs. The next upside price objective for the live cattle bulls is to close June futures above resistance at the contract high of $207.725. The next downside technical objective for the bears is closing prices below solid technical support at $197.00. First resistance is seen at today’s high of $206.175 and then at $207.725. First support is seen at $203.00 and then at $202.00.
The next upside price objective for the feeder bulls is to close May futures prices above technical resistance at the contract high of $290.625. The next downside price objective for the bears is to close prices below solid technical support at $275.00. First resistance is seen at $287.00 and then at today’s high of $288.35. First support is seen at $285.00 and then at $283.00.
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: You have all corn-for-feed needs covered in the cash market through April. You have all soymeal needs covered in the cash market through May.