Hogs
Price action: October lean hog futures climbed $1.10 to $77.025 and settled nearer session highs. Nearby August futures firmed 87.5 cents to $93.15.
Fundamental analysis: Lean hog futures built on Wednesday’s gains as continued strength in the cash market underpins futures. Traders shook off sharp losses seen in the cattle markets today, a testament to the strength in hogs. The CME lean hog index continues to march higher, rising 49 cents to $93.08 as of July 30, marking a fresh seasonal high. USDA data points tomorrow’s quote another 45 cents higher to $93.53 in the preliminary calculation, a modest premium to August futures, which quickly negated most of the discount to the index seen earlier this week. Rebounding wholesale beef prices likely played a role in futures strength today as well. Across-the-board gains led pork cutout $2.16 higher to $107.04, which would mark the highest quote since mid-August of last year if sustained through afternoon trade. Strong gains in ribs and loins led strength this morning. Rising wholesale prices are likely to continue to encourage packers to pay up for hogs, extending the late summer rally in the index to fresh highs in the days to come.
Technical analysis: October lean hog futures continue to claw back Monday’s loss, restarting an uptrend on the daily bar chart. Bulls are seeking to maintain the uptrend and overcome resistance at $77.125, which is reinforced by last Friday’s for-the-move high close at $78.20. Uptrend support persists at $75.50 with additional support at $76.20, the 40-day moving average, on the way.
What to do: Get current with feed advice. Carry all production risk in the cash market for now.
Hedgers: Carry all 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 August.
Cattle
Price action: October live cattle fell $2.95 to $183.725, near the session low and hit a two-week low. October feeder cattle closed down $5.275 at $250.875, nearer the session low and hit a 3.5-month low.
Fundamental analysis: The live cattle futures market saw heavy profit-taking pressure today after prices late last week hit a nine-month high. Feeder cattle futures dropped sharply today despite this week’s meltdown in the corn futures market. Cattle futures traders may now be focusing on the seasonally bearish tendency for higher slaughter levels combined with less consumer demand for beef in the heat of summer.
Cash cattle trade has been slow so far this week despite larger show list numbers. A handful of deals have been reported in Kansas at $188.00, which is $2.00 below last week’s cash trade levels. Today’s noon report showed Choice-grade boxed beef prices fell $1.34 to $313.43, while Select-grade dropped $1.12 to $299.04. Movement at midday was 74 loads, suggesting consumer demand for beef at the meat counter remains solid. The Choice-Select spread is presently $14.39.
USDA this morning reported U.S. beef export sales of 17,700 MT for 2024, up 32% from the previous week and up 35% from the four-week average.
Technical analysis: The live cattle futures bulls still have the overall near-term technical advantage but faded today. A 3.5-month-old uptrend on the daily bar chart is still in place. The next upside price objective for the bulls is to close October futures above solid resistance at the July high of $189.05. The next downside technical objective for the bears is closing prices below solid technical support at $180.00. First resistance is seen at $185.00 and then at $186.00. First support is seen at today’s low of $183.275 and then at $182.00.
The feeder cattle futures bears have the overall near-term technical advantage. Prices are in a two-month-old downtrend on the daily bar chart. The next upside price objective for the feeder bulls is to close October futures prices above technical resistance at this week’s high of $259.325. The next downside price objective for the bears is to close prices below solid technical support at the April low of $245.90. First resistance is seen at $252.00 and then at $254.00. First support is seen at today’s low of $249.85 and then at $248.00.
What to do: Get current with feed advice. 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 August.