Hogs
Price action: After opening weakly, hog futures edged higher again Thursday. Nearby October futures rose 50 cents to $82.175.
Fundamental analysis: Both cash hog and wholesale pork prices are declining this week. For example, after the CME confirmed Tuesday’s quote for the lean hog index had fallen 37 cents to $87.45, the latest USDA data indicated Wednesday’s quote is likely to fall another 41 cents to $87.04. However, the market remains remarkably stable, especially when compared to its performance one year ago. That is, the index peaked at $106.00 in late July 2023, then plunged to $86.01 on Sept. 5. The index topped out at $93.59 on August 2 this year and has worked slowly lower since then despite hog slaughter routinely topping year-ago levels by 1%-2%, and hog weights generally running about 6 pounds per head over year ago, this summer. Thus, if the recent slide doesn’t accelerate, it’s possible the index will move above year-ago levels next week.
Pork cutout failed to sustain Wednesday’s early gain, ending the day 77 cents lower at $95.28, and it slipped another 33 cents to $94.95 this morning. Still, it remains decidedly stable in the face of seasonally surging hog supplies and slaughter rates. We still think the apparent improvement in hog and pork demand since Independence Day will persist into fall. That might power a significant September rally. Increasing industry suspicions along those lines are almost surely powering recent futures gains (due to the sizeable discounts already built into futures).
Technical analysis: Bulls still own the short-term technical advantage in October lean hog futures. Bears took another shot at forcing a reversal in today’s early trading, but proved unable to penetrate initial support at the daily low of $81.10. That’s strongly backed by psychological support at the $80.00 level, then at Tuesday’s low of $79.675. A drop below that point would probably open the door to a retest of 40-day moving average support near $75.50. Resistance at today’s high of $82.275 is backed by Tuesday’s and Monday’s respective highs of $82.425 and $82.475. A push above that area would likely have bulls targeting the psychological $85.00 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 72 1/2 cents to $177.90 and nearer the session low. October feeder cattle closed down $1.90 at $236.675 and nearer the daily low.
Fundamental analysis: The cattle futures markets today saw chart-based selling from the speculators featured as technicals favor the bears. Futures traders are awaiting this week’s cash cattle trading to develop in earnest. There was some trading in the north Wednesday. Nebraska officially saw 877 head traded at $184.00, while Iowa-southern Minnesota had 1,020 head change hands at $183.54. The weighted average for the two areas is $183.75. Packers are likely working to protect margins that recently moved into the black.
The noon report today showed Choice-grade cutout up 94 cents to $308.23. Select grade fell $1.09 to $296.54. That took the Choice/Select spread to $11.69. Movement at midday was decent at 86 loads.
USDA today reported weekly U.S. beef export sales of 17,200 MT for 2024, up 8% from the previous week but down 4% from the prior 4-week average.
Cattle market bulls are hoping still-tight supplies of market-ready animals and good consumer demand for beef will keep a floor under the cash and futures markets in the near term.
Technical analysis: The cattle futures bears have the overall near-term technical advantage. October live cattle futures 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 this week’s high of $180.175 and then at $181.00. First support is seen at $176.825 and then at $176.00.
Feeder cattle futures 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 $243.45. 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 this week’s high of $239.825 and then at $241.00. First support is seen at $236.00 and then at $235.00.
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.