Hogs
Price action: October lean hogs rose 47 1/2 cents to $93.90, nearer the daily low and hit a two-month high early on.
Fundamental analysis: The lean hog futures market is surging this week on technical buying from the chart-based speculators and due to the soaring live and feeder cattle futures markets that are at record highs. However, today’s low-range close in October hogs suggests the bulls may now be near-term exhausted.
Cash hog and pork market fundamentals have weakened a bit this week. The latest CME lean hog index is down another 41 cents to $106.86 as of Aug. 25. Thursday’s CME cash index is projected down another 23 cents to $106.63. The national direct five-day rolling average cash hog price quote today is $108.40. The noon report today showed pork cutout value slid $1.09 to $111.96 led by declines in loins, butts and bellies. Movement at midday was 153.81 loads.
Technical analysis: Lean hog futures bulls have the solid overall near-term technical advantage and gained more power today. A choppy price uptrend is in place on the daily bar chart. The next upside price objective for the hog bulls is to close October futures prices above solid chart resistance at the contract high of $97.05. The next downside price objective for the bears is closing prices below solid technical support at $90.00. First resistance is seen at today’s high of $94.825 and then at $96.00. First support is seen at today’s low of $93.40 and then at $92.00.
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 September in the cash market, with half coverage for October, November and December. For corn, you now have all needs through October covered in the cash market.
Cattle
Price action: October live cattle rose $1.325 to $239.525, near mid-range after hitting another contract high early on. September feeder cattle rose 35 cents to $365.40, nearer the daily low and hit a contract/record high early on.
Fundamental analysis: The live and feeder cattle futures markets continue to surge to contract/record highs on technical buying from the speculators and due to the spec bears being scared to step in and short the markets. Nearby August live cattle futures prices are now trading above the cash cattle market for the first time in quite a while. However, today’s closes that were well off the daily highs hints that the live and feeder cattle futures bulls may now be exhausted.
Cash cattle and beef market fundamentals remain solid. Very light cash cattle trade has occurred so far this week, with USDA reporting steers fetching an average price of $241.24 and heifers fetching $240.00. Last week’s average cash cattle trading price was $244.25. The latest CME feeder cattle index jumped to a new all-time high of $359.17.
The noon report today showed wholesale boxed beef values fell after surging Tuesday, with Choice grade down $2.08 to $411.09, while Select dropped $2.92 to $387.84. Movement at midday was solid at 71 loads. The Choice-Select spread is presently $23.25.
Technical analysis: Live and feeder cattle futures bulls have the strong overall near-term technical advantage. Prices are in a two-month-old uptrend on the daily bar chart. The next upside price objective for the live cattle bulls is to close October futures above resistance at $245.00. The next downside technical objective for the bears is closing prices below solid technical support at $232.50. First resistance is seen at today’s contract high of $242.075 and then at $243.00. First support is seen at today’s low of $237.65 and then at $235.00.
The next upside price objective for the feeder bulls is to close September futures prices above technical resistance at $375.00. The next downside price objective for the bears is to close prices below solid technical support at this week’s low of $354.525. First resistance is seen at the contract high of $370.00 and then at $372.00. First support is seen at today’s low of $364.675 and then at $362.00.
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.