Hogs
Price action: June lean hog futures fell 15 cents to $101.00 and settled near mid-range.
Fundamental analysis: Lean hog futures paused from the recent rally today as woes regarding China trade are challenging the recent cash-fundamental-driven uptrend. Reports that China is considering waning some restrictions on U.S. imports has caused a bit of a mixed reaction in the marketplace. Agricultural products were absent from the circulated list of products. Reduced export demand for pork is becoming more clear and is having a more tangible impact on the hog and pork market. Anticipation of this reduction of demand could be contributing to the recent sideways action seen in pork. Pork cutout has spent a significant portion of the past 2 months between $94 and $100 and is now testing the upper end of that range. Cutout rose 10 cents at midsession to $98.14, supported by gains in hams and picnics. The CME lean hog index is up another 27 cents to $87.54 as of April 24, the seventh consecutive daily gain. Strength picked up in the cash market over the last couple of days and the preliminary calculation puts the index up another 64 cents to $88.18 tomorrow.
Technical analysis: June lean hogs traded on either side of unchanged before closing modestly lower. Bulls maintain an uptrend on the daily bar chart, though prices threatened a breakdown earlier in today’s session. Key support comes in at $100.00, while a break below that mark targets 10-day moving average support at $98.30. Bulls are looking to tackle resistance at today’s high of $101.975 before tackling resistance at $102.50.
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 corn-for-feed needs covered in the cash market through May. You also have all soymeal needs covered in the cash market through May.
Cattle
Price action: June live cattle rose $1.35 to $209.60, near the daily high and hit a contract high. May feeder cattle rose $1.275 to $291.80, near mid-range and hit a contract high early on.
Fundamental analysis: The cattle futures markets saw prices push to new for-the-move highs on strong cash and beef market fundamentals. However, gains in futures were somewhat limited by a risk-off day in the general marketplace to start the trading week. U.S. stock indexes were under selling pressure in afternoon trading.
Cash cattle traded solidly higher late last week and the weekly average cash price fetched $216.32, which is a new record and up $4.69 from the week prior. We look for still-higher cash cattle trade when it commences later this week. Despite wanting to limit cattle slaughter levels amid highly negative cutting margins, packers continued to actively bid for cash cattle to meet solid retailer/consumer demand just ahead of the grilling season. The noon report today showed boxed beef cutout values solidly higher, too, with Choice grade up $5.14 at $341.62 and Select grade up $3.74 to $323.85. The Choice-Select spread is presently $17.77. Movement at midday was light at 37 loads.
USDA Secretary Brooke Rollins on Saturday said the New World Screwworm (NWS) outbreak is escalating and unless Mexico removes restrictions on USDA aircraft and waives customs duties on eradication equipment by April 30, the U.S. will close ports of entry to cattle, bison and equine from Mexico.
Technical analysis: Live and feeder cattle futures bulls have the strong overall near-term technical advantage. The next upside price objective for the live cattle bulls is to close June futures above resistance at $215.00. The next downside technical objective for the bears is closing prices below solid technical support at $203.00. First resistance is seen at today’s contract high of $209.825 and then at $211.00. First support is seen at today’s low of $208.25 and then at $207.00.
The next upside price objective for the feeder bulls is to close May futures prices above technical resistance at the contract high of $295.00. The next downside price objective for the bears is to close prices below solid technical support at $285.00. First resistance is seen at today’s contract high of $292.675 and then at $294.00. First support is seen at $290.00 and then at $288.00.
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 should have all corn-for-feed needs covered in the cash market through May. You also have all soymeal needs covered in the cash market through May.