Hogs
Price action: August lean hog futures rose $0.725 to $95.425, nearer the daily high and hit a nearly seven-month low early on today.
Fundamental analysis: The lean hog futures market saw some short covering and some perceived bargain buying today. Near-term technicals remain firmly bearish as a price downtrend remains in place on the daily bar chart. A close on Friday near the weekly high would be one chart clue that the bears have run out of gas and that a near-term market bottom is in place.
The latest CME lean hog index is up 13 cents at $92.76. Thursday’s projected cash index price is up another 16 cents at $92.92. The national direct five-day rolling average cash hog price quote today is $96.38. The noon report today showed pork cutout value up $0.69 at $96.65, led by gains in butts. Movement at midday was decent at 185.12 loads.
Technical analysis: August lean hog futures bears still have the solid overall near-term technical advantage. Prices are in a steep downtrend on the daily bar chart. The next upside price objective for the hog bulls is to close June futures prices above solid chart resistance at $100.00. The next downside price objective for the bears is closing prices below solid technical support at the November low of $93.675. First resistance is seen at Tuesday’s high of $96.55 and then at $98.00. First support is seen at $93.675 and then at $92.00.
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 have corn-for-feed and soymeal needs covered through July in the cash market. Be prepared to make purchases if value prices continue.
Cattle
Price action: August live cattle rose $1.80 to $241.50, nearer the daily high. August feeder cattle gained $0.225 to $354.375, near mid-range.
Fundamental analysis: The cattle futures markets saw speculator buying interest today as traders on this day focused on the bullish elements of the New World screwworm being detected in the southern U.S. USDA confirmed five cases of NWS in the U.S., three calves and a goat in Texas, and one dog in New Mexico. Mexico also closed its border to U.S. cattle imports.
USDA at midday today reported very light cash cattle trading early this week, averaging $254.15. The agency on Monday reported last week’s average cash cattle trading price was $256.53—down 33 cents from the week prior. The noon report today showed wholesale boxed beef cutout values higher. Choice-grade was up $1.91 at $394.81, while Select-grade gained $0.92 to $377.85. Movement at midday was 63 loads. The Choice-Select spread at midday today was plus $16.96.
Beef and veal prices increased 12.9% year-over-year according to this morning’s CPI report, with ground beef increasing 12.1% over that time.
Technical analysis: Live and feeder cattle futures still see price downtrends in place on their daily bar charts. The next upside price objective for the live cattle bulls is to close August futures above resistance at the contract high of $251.65. The next downside technical objective for the bears is closing prices below solid technical support at last week’s low of $233.975. First resistance is seen at this week’s high of $243.25 and then at the June high of $245.225. First support is seen at today’s low of $239.275 and then at $237.00.
The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at $363.00. The next downside price objective for the bears is to close prices below solid technical support at the June low of $335.95. First resistance is seen at the June high of $358.75 and then at $360.00. First support is seen at today’s low of $352.15 and then at $350.00.
What to do: You have corn-for-feed and soymeal needs covered through July in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You have corn-for-feed and soymeal needs covered through July in the cash market. Be prepared to make purchases if value prices continue.