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Hogs
Price action: April lean hog futures fell 5 cents to $95.625, nearer the daily low and for the week down 10 cents.
5-day outlook: The lean hog futures market paused to end a choppy trading week. Risk aversion in the general marketplace this week did squelch the hog futures bulls, amid the ongoing Middle East war.
The latest CME lean hog index is up 37 cents to $90.55. Monday’s projected cash index price is up another 19 cents to $90.74. The national direct five-day rolling average cash hog price quote for today is $67.90. The noon report today showed pork cutout value down 44 cents at $98.78, led by losses in loins and butts. Movement at midday was 137.41 loads.
30-day outlook: A resilient cash hog market strength continues to lend support to lean hog futures and will keep a floor under present futures prices. A very weak U.S. jobs report today helped to wobble the stock market. If consumer confidence starts to erode, pork demand will likely benefit from consumers switching to the more economical pork cuts at the meat counter. Also. a key in the coming weeks will be export demand for U.S. pork. Reports out of China say there is a domestic pork glut, which does not bode well for Chinese purchases of U.S. pork.
90-day outlook: The upcoming grilling season coincides with a seasonal contraction in hog supplies and should support hog and pork prices in the coming few months. Still, increased global demand for pork may have to occur in order to lift hog and pork markets prices from present levels, in the coming months.
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 March in the cash market. You should also have corn-for-feed needs purchased through March. Be prepared to make additional purchases.
Cattle
Price action: April live cattle futures fell $3.95 to $234.575, near the session low. For the week, April live cattle gained $2.35. March feeder cattle futures lost $6.975 to $355.625, near the daily low. For the week, March feeders were up 20 cents.
5-day outlook: The cattle futures markets saw heavy profit-taking pressure and weak long liquidation from the shorter-term futures traders today, amid keener risk appetite in the general marketplace to end the trading week, as the war in Iran continues.
Very light cash cattle trade was reported by USDA at midday today, with the agency saying steer and heifer prices averaged $240.00. USDA Monday reported average cash cattle trading last week at $242.71. The noon report today showed boxed beef cutout values mixed, with Choice-grade up 18 cents to $387.07, while Select-grade fell 54 cents to $380.07. Movement at midday was light at 45 loads. The Choice-Select spread is presently plus $7.00.
Choice boxed beef notched impressive price gains once again this week, but increasing the concern of wholesale price increases being passed on to already strained retail consumers. The number of head slaughtered this year is roughly 500,000 lower than last year at this date, highlighting both the tight supplies and the reduced capacity of U.S. production capacity.
30-day outlook: The U.S. economy lost 92,000 non-farm payroll jobs in February, the Labor Department reported this morning, marking a sharp slowdown from the strongly downward revised 126,000 increase recorded in January. The unemployment rate rose to 4.4% versus expectations for a rate of 4.3%. This report is a mixed bag for the cattle futures market. This report falls squarely into the camp of the U.S. monetary policy doves, who want to see U.S. interest rate cuts coming sooner. That’s a positive as lower interest rates boost consumer confidence. However, the significant drop in payroll employment spooked the stock market amid concerns about business growth. That’s a negative for consumer confidence. We would not be surprised to see sideways and choppy trading in the cash cattle and futures markets in the coming weeks, as the Iran war plays out and fresh U.S. economic data is evaluated.
90-day outlook: Longer-term supply and demand fundamentals remain solid for the cattle and beef markets. Historically tight cattle supplies on feedlots and still-strong consumer demand for beef will continue to limit the downside in prices. Cattle futures traders will be more closely watching the U.S. stock indexes in the coming weeks. If the stock indexes continue to wobble, consumer confidence could be dented, which in turn could reduce demand for beef at the meat counter.
What to do: Cover corn-for-feed needs through March in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.