Hogs
Price action: October lean hogs rose $1.675 to $82.075, nearer the session high and hit a nearly three-month high.
Fundamental analysis: Technical buying was featured in lean hog futures today as the near-term chart posture has turned firmly bullish. Traders are narrowing futures’ discounts to the cash index, with October lean hogs presently trading about $5.75 below the index. The latest CME lean hog index is down 36 cents to $87.86 as of Aug. 23, extending the pullback from the seasonal peak on Aug. 1. Wednesday’s projected cash index price is down another 4 cents at $87.82. Today’s national direct five-day rolling average cash hog price quote is $81.51. The noon report showed pork cutout value up 3 cents to $95.01, with loins the lead gainer. Movement at midday was decent at 170.42 loads.
Technical analysis: October lean hogs scored a bullish “outside day” up on the daily bar chart today. The bulls have the firm overall near-term technical advantage. Prices are in a three-week-old uptrend on the daily bar chart. The next upside price objective for the hog bulls is to close October prices above solid chart resistance at $85.00. The next downside price objective for the bears is closing prices below solid technical support at $77.50. First resistance is seen at today’s high of $82.475 and then at $83.50. First support is seen at $81.00 and then at today’s low of $79.675.
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 surged $2.425 higher to $179.40 and settled near session highs. September feeder cattle futures climbed 57.5 cents to $241.925 and settled near mid-range.
Fundamental analysis: Cattle futures surged in a bullish technical breakout, negating the downtrend from the July highs. Cattle futures opened higher and saw sustained strength throughout today’s session. Cash trade has yet to take place this week but analysts are expecting lower trade this week as packers are seen as having all of their short-term needs met. Still, deferred contracts are well below the cash market, though some of that discount was negated today. We anticipate strong beef demand limiting the downside in cattle futures, similar to last fall. Cattle futures have had a tendency for weeks of sharp selling pressure followed by a rise to new highs. Recent price action has shown that an interim low could be in place, setting the stage for a rally into the fall, though cash cattle prices would need to participate in the upside. Wholesale beef prices were higher at midsession following weaker trade on Monday. Choice cutout was up 38 cents to $316.28 this morning, while Select surged $3.48 higher to $303.67.
Feeder cattle futures surged higher today as well, though to a lesser extent than fats. The feeder index has shown extensive weakness over the past month, though has begun to base the past couple of days. The most recent reading shows the index up $1.13 to $242.83.
Technical analysis: October live cattle futures surged above downward trendline resistance today. While bears still own a slight near-term technical advantage, their edge is waning. Support stems from $177.50 then the psychological $175.00 mark. Bulls are seeking to overcome resistance at $180.00 then the Aug. 15 high of $182.525.
September feeder cattle futures followed fats higher today. Bears continue to hold the near-term technical advantage in feeders despite the strength seen over the past week. Resistance stems from $242.85, the 20-day moving average, which capped gains today. Further resistance is found at $244.35. Support lies at $240.30 then $237.425.
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.