Hogs
Price action: October lean hog futures slipped 15 cents to $80.40 and settled near mid-range.
Fundamental analysis: October lean hog futures marked a fresh for-the-move high though ultimately closed lower on the day as pork prices turned lower once again. After firming to end the week last week, wholesale pork prices were $4.21 lower to $94.84 at midsession, led lower by steep drops in hams, bellies and loins. If sustained through afternoon trade, the drop would negate the rally seen last week in pork. The seasonal tendency for hog and pork is weakness in the coming weeks but recent improvements in consumer demand have drawn into question whether this year might see relative strength. Last week’s Cold Storage Report from USDA gave credence to our belief that pork might see a smaller-than-average decline as pork stocks dropped 24.2 million lbs. in July, far greater than the five-year average 7.2-million-lb. decline for the month. Still, the sinking CME lean hog index, which is down 61 cents to $88.22 today, continues to weigh on futures. The preliminary calculation puts the index down another 36 cents to $87.86 tomorrow.
Technical analysis: October lean hog futures traded on either side of unchanged before closing modestly lower on the day. Bulls own the near-term technical advantage, though some profit-taking the next few days is possible. Resistance stems from today’s high of $81.45, which is reinforced by resistance at $82.25. Support lies at the psychological $80.00 mark, with reinforcement from $77.75, the 10-day moving average.
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 rose $1.275 to $176.975 and near mid-range. October feeder cattle closed up $3.10 at $237.475 and nearer the session high.
Fundamental analysis: The cattle futures markets today saw short covering following recent selling pressure that drove prices to multi-month lows last week. Last week’s average cash cattle trading price was $185.54, down $3.60 for the fourth straight weekly drop and the lowest average price since April. We look for cash cattle prices to be down again this week. Today’s noon report showed wholesale beef prices declined, with Choice grade down 36 cents to $316.98, while Select dropping $1.45 to $299.01. Prices are well down from summer highs but remain somewhat supported by still-tight market-ready supplies of cattle. Movement at midday was 63 loads. The Choice-Select spread is presently at $17.97.
World Weather Inc. today said the southern Plains will see increased livestock stress early this week due to hot temperatures.
Friday afternoon’s USDA monthly Cattle-on-Feed Report was mildly bearish. Cattle in feedlots were 65,000 head higher than expected at 11.095 million head. Placements increased 5.8% (a 3.2% increase was expected) and marketings rose 7.7% (an 8.1% increase was expected). Meantime, Friday’s USDA cold storage data was positive for beef. The report showed beef stocks in frozen storage at the end of July at 407.1 million lbs., down 799,000 lbs. from June. Beef stocks declined 3.3 million lbs. (0.8%) from year-ago.
Technical analysis: The live cattle futures market scored a bullish “outside day” up today but the bears still have the overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. The next upside price objective for the bulls is to close October futures above solid resistance at $182.525. The next downside technical objective for the bears is closing prices below solid technical support at the August low of $173.725. First resistance is seen at today’s high of $178.30 and then at $179.00. First support is seen at $176.00 and then at $175.00.
October feeder futures prices also scored a bullish “outside day” up on the daily bar chart today. The bears still have the firm overall near-term technical advantage. Prices are in a seven-week-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 $245.00. The next downside price objective for the bears is to close prices below solid technical support at the August low of $229.35. First resistance is seen at today’s high of $238.70 and then at $240.00. First support is seen at $235.00 and then at today’s low of $232.925.
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.