Hogs
Price action: June lean hog futures climbed 72.5 cents to $98.30 though settled near session lows.
Fundamental analysis: Lean hog futures posted robust gains in the deferred contracts today, though the nearby contract saw weaker gains as a sagging cash market continues to weigh on prices. The reduction in tariffs between the U.S. and China led to a favorable tone across the marketplace today, leading most agricultural futures higher alongside the broader marketplace. This de-escalation in tensions caught the market somewhat by surprise. After week’s of tough talks, the rapid reduction of tariffs to “more manageable” levels has traders hopeful. The lowering of tariffs will make U.S. pork more competitive on the Chinese market, which could lead to a resurgence of export demand and help lift pork cutout. The cash market showed little signs of the newfound bullish news today, which is not surprising, giving these shifts in global supply chains take time to take place, which likely led to the weakness in nearby futures today.
The CME lean hog index is down 8 cents to $89.99 as of May 8, the second straight daily decline. The preliminary calculation puts the index down another 5 cents to $89.92 tomorrow, though the internals of the calculation indicate some stabilization is likely. Pork cutout gave back a portion of Friday’s surge higher, falling 49 cents to $97.34 this morning, led by losses in butts and loins.
Technical analysis: June lean hog futures opened sharply higher this morning but struggled to hold onto gains as the session went on. While bulls still hold the technical advantage following Friday’s break higher, today’s candle on the daily chart paints an ominous picture for bulls. Followthrough selling tomorrow could quickly negate bulls’ advantage. Support steams from $98.05, the 10-day moving average, then $97.65. Bulls are ultimately looking to hold prices above downtrend support at $96.50. Resistance stands at $99.35 then the psychological $100.00 mark on a reversal back higher.
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 and soymeal needs covered in the cash market through June.
Cattle
Price action: June live cattle rose $2.15 to $216.825, near mid-range and hit a contract high and a record high. August feeder cattle rose $6.075 to $306.375, near the daily high and hit a contract/record high.
Fundamental analysis: The cattle futures markets got a double-barrel blast of bullish fundamental news to start the trading week. USDA Secretary Brooke Rollins on Sunday announced the suspension of live cattle, horse and bison imports through ports of entry along the U.S./Mexico border due to the rapid northward advance of the New World Screwworm (NWS) in Mexico. Also, much better risk appetite in the general marketplace to start the trading week boosted speculator buying interest in cattle and bodes well for increased consumer confidence and in turn better demand for beef at the meat counter.
Cash cattle trading last week averaged $224.80, up $3.83 from the week prior and a new record high—for the fourth straight week. We look for at least steady-firmer cash cattle trading later this week as cash cattle and beef market fundamentals remain solid. The noon report today showed wholesale boxed beef values higher, with Choice grade up $1.95 to $347.92, while Select grade gained $2.60 to $333.77. Movement at midday was decent at 69 loads. The Choice-Select spread is presently $14.15.
Technical analysis: Live and feeder cattle futures bulls have the strong overall near-term technical advantage. Prices are in strong uptrends on the daily bar charts. The next upside price objective for the live cattle bulls is to close June futures above resistance at $220.00. The next downside technical objective for the bears is closing prices below solid technical support at $210.00. First resistance is seen at today’s contract/record high of $217.75 and then at $219.00. First support is seen at $215.00 and then at $214.00. The next upside price objective for the feeder bulls is to close August futures prices above technical resistance at $310.00. The next downside price objective for the bears is to close prices below solid technical support at last week’s low of $292.625. First resistance is seen at today’s contract/record high of $303.175 and then at $305.00. First support is seen at $300.00 and then at $298.00.
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 and soymeal needs covered in the cash market through June.