Hogs
Price action: June lean hogs slid 47.5 cents to $100.85 and closed near session lows, though deferred contracts saw gains.
Fundamental analysis: Hog futures saw profit-taking today despite building strength in the CME lean hog index. June futures opened higher but found technical resistance at the April highs, while July futures made a fresh for-the move high today before turning lower. Most of the volume is now taking place in the July and August contracts as traders have rolled out of June futures. The CME lean hog index is up another 71 cents to $94.84 as of May 29, a fresh for-the-move high. The preliminary calculation puts the index up another $1.06 to $95.90, showcasing the building strength in the cash market. Pork cutout working to the highest mark since August 2023 on Friday has been supportive for the cash index, but stalling gains in wholesale pork today likely weighed on futures somewhat. Pork cutout fell a penny to $107.21 this morning as losses in loins and bellies pulled cutout lower, while $4 rises in ribs and picnics helped offset losses. If the index continues to chip higher at the current rate, futures are likely to build additional premiums over the cash market in the coming days.
Technical analysis: June lean hogs saw a disappointing reversal after trading to the highest mark in over a month in early trade. Bulls retain a slight technical advantage but prices are in danger of falling back into the recent sideways trading range. Support comes in at the psychological $100.00 mark then the 40-day moving average at $98.75. Initial resistance stands at $101.325 though bulls are ultimately targeting a break above the April 28 high of $101.975.
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 and soybean meal needs covered in the cash market through July.
Cattle
Price action: June live cattle rose $1.075 to $216.55, nearer the daily high. August feeder cattle rose $2.925 to $301.75 and near the daily high.
Fundamental analysis: The cattle market bulls shrugged off somewhat of a risk-off trading day in the general marketplace today, amid rising trade tensions between the U.S. and China. Instead, still-strong cash cattle and beef market fundamentals continue to drive the bulls markets in live and feeder cattle futures. Live cattle futures also continue to see support from the June contract’s very steep discount to the cash cattle market.
Last week’s USDA official average cash cattle price was at a record high of $229.94, which is up $2.97 from the week prior and a seventh consecutive week of price gains, with six of those being record highs. The noon report today showed wholesale beef prices mixed, with Choice grade down 20 cents to $366.14 and Select grade up 80 cents to $357.45. Movement at midday was decent at 68 loads. The Choice-Select spread is presently $8.69.
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 June futures above resistance at the contract high of $218.625. The next downside technical objective for the bears is closing prices below solid technical support at $210.625. First resistance is seen at last week’s high of $217.50 and then at $218.625. First support is seen at Friday’s low of $215.30 and then at $214.00.
The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at the contract high of $307.675. The next downside price objective for the bears is to close prices below solid technical support at last week’s low of $293.05. First resistance is seen at $303.00 and then at $304.00. First support is seen at $300.00 and then at today’s low of $298.575.
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 and soybean meal needs covered in the cash market through July.