Hogs
Price action: October lean hogs fell $1.475 to $72.85, near mid-range and hit a four-week low.
Fundamental analysis: The lean hog futures market succumbed to technical selling pressure today as prices continue in a downtrend on the daily bar chart. Cash hog market fundamentals have also eroded recently. Wednesday’s CME lean hog index is projected at down 58 cents at $90.34—which would be down for the seventh straight session. The big discounts the futures contracts have to the CME hog index are indicative of the pessimism currently exhibited by lean hog futures traders. The national direct five-day rolling average cash hog quote today is $83.60. The wholesale pork market is not performing too badly, which gives the hog market bulls some hope the selling pressure in futures will subside soon. The noon report today showed pork cutout value rose another $1.41 to $101.68, led higher by bellies. Movement at midday was decent at 183.70 loads.
Technical analysis: The lean hog futures bears have the firm overall near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. The next upside price objective for the hog bulls is to close October prices above solid chart resistance at the July high of $78.70. The next downside price objective for the bears is closing prices below solid technical support at the contract low of $68.05. First resistance is seen at this week’s high of $74.65 and then at $75.00. First support is seen at today’s low of $71.325 and then at $70.00.
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 futures firmed 72.5 cents to $180.75 though settled well off intraday highs. September feeder cattle futures climbed $2.675 to $242.175.
Fundamental analysis: Live cattle futures traded most of the session within yesterday’s range as prices continue to consolidate on the daily bar chart. After heavy selling pressure in the final days of July and early August, cattle futures have bounced modestly but have seen little followthrough to the upside. Traders are likely awaiting fresh data from the cash market. A notable futures discount to the cash market continues to limit selling pressure, though traders continue to anticipate a downturn in cash prices, keeping discounts to the cash market in place. Cash cattle trade started in the southern market on Monday at $185.00, steady from a week ago at this time. A small amount traded hands in Iowa at $191.00, down modestly from last week’s average. The continued rebound in wholesale beef is indicative of demand staying quite robust despite continued high prices. Tomorrow’s CPI report will give an inside look into whether grocers kept beef prices near records in July or cut prices. Choice cutout firmed $2.47 to $318.30 and Select rose $1.15 to $301.32 on Monday.
Feeder cattle futures saw strength today as well, negating yesterday’s loss. Feeders have quickly closed the gap between futures and the feeder cattle index, due mostly in part to continued weakness in the index, which most recently dropped $4.14 to $245.57. Sustained weakness in the feeder cattle index is likely to weigh heavily on futures if it persists, especially considering the tendency for futures to trade at a discount to the index.
Technical analysis: October live cattle futures made up most of yesterday’s losses, though bears continue to hold the near-term technical advantage. Bulls have not been able to force back-to-back green closes since July 24-25. Resistance stems from the 10-day moving average at $181.25 then the August 2 close at $182.075. Support comes in at yesterday’s low of $179.85, with firm backing from $178.025.
September feeder futures negated yesterday’s loss though continue to face sustained selling pressure, rendering the technical advantage to the bears. Initial resistance stems from yesterday’s high of $242.65, which is reinforced then the 10-day moving average at $244.00. Bulls are seeking to hold support at $239.50 then the recent for-the-move low of $236.575 on resurgent selling pressure.
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.