Hogs
Price action: Hog futures reacted well to supportive cash and wholesale news. Nearby October futures rose 57.5 cents to $76.50.
Fundamental analysis: As implied yesterday, and discussed here, the hog index looks set to rise when officially quoted tomorrow. As the preliminary figure indicated, Tuesday’s official quote slipped 16 cents to $90.18 when published this morning. USDA data indicates it will edge up two cents to $90.20 when stated tomorrow. Today’s weak early trading probably reflected wholesale pork slippage posted Wednesday afternoon. Cutout fell $1.02 to $99.31 after having risen modestly in the morning. But today’s midday quote leapt $4.30 to $103.61, with the bulk of that strength being provided by a big jump in pork belly values.
Cash market weakness will probably resume next week since the supply of hogs is almost surely set to surge on a seasonal basis. Weekly totals traditionally rise over 200,000 head from early August to mid-October. Demand for most pork cuts also tends to decline after Labor Day, with hams being the exception as the industry gears up for the year-end holiday season. However, as mentioned previously, we suspect recent market action, particularly packers’ changed buying pattern from that they carried out during spring and early summer, may make this one of the recently rare years in which the cash hog and pork markets prove surprisingly strong during September. If so, heavily discounted futures are likely undervalued.
Technical analysis: Bulls now enjoy the short-term technical advantage in nearby October futures, especially after bears proved unable to challenge initial support at the 40-day moving average near $74.45, which bulls smashed through Wednesday. That support is closely backed by June 14 high at $74.15. A drop below those levels would have bears targeting support at the July 8 low of $72.30, then Tuesday’s low of $71.325 and the psychologically important $70.00 level. Bulls proved unable to force a close above initial resistance stemming from the June 21 high of $76.70, with today’s high marking added resistance at $76.875. Stiffer resistance stems from the June 5 high of $78.80 and likely extends up to the psychological $80.00 level.
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 $1.375 to $180.75 and near the session low after hitting a two-week high early on. October feeder cattle closed down $1.20 at $240.90 and near the session low.
Fundamental analysis: The live and feeder cattle futures markets succumbed to chart-based selling pressure today, as technicals still favor the bears in both markets. The bulls could get no traction from a much-stronger-than-expected U.S. retail sales report and a drop in weekly jobless claims that suggested consumer confidence is still upbeat, which implies better demand for beef at the meat counter.
Cash cattle trade so far this week has been light, with not enough volume to establish a clear price trend. Wednesday’s cash cattle trade remained minimal, with the sale of 128 head of Iowa-southern Minnesota cattle at $190.00. That’s up $2.00 from the little trading that took place in Iowa Tuesday. Today’s noon report showed Choice-grade boxed beef rose $2.09 to $316.97, while Select gained 83 cents to $301.33. Movement at midday was decent at 72 loads. The Choice-Select spread is presently $15.64.
USDA this morning reported U.S. beef export sales of 28,100 MT during 2024, a marketing-year high and up noticeably from the previous week and up 99% from the four-week average.
World Weather Inc. today said excessive heat and limited rainfall in the next seven days in the southern Plains will lead to increased livestock stress. “A similar weather pattern is expected in the second week of the outlook and will cause a continuation of these issues from the first week,” said the forecaster.
Technical analysis: The live cattle futures bears have the slight overall near-term technical advantage after the recent steep price downdraft. The next upside price objective for the bulls is to close October futures above solid resistance at $185.00. The next downside technical objective for the bears is closing prices below solid technical support at the August low of $176.35. First resistance is seen at today’s high of $182.525 and then at $184.00. First support is seen at $180.00 and then at $179.00.
The feeder cattle futures bears have the firm 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 $246.00. The next downside price objective for the bears is to close prices below solid technical support at the August low of $235.35. First resistance is seen at today’s high of $243.40 and then at $245.00. First support is seen at $239.00 and then at $238.00.
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.