Hogs
Price action: October lean hog futures skidded 85 cents to $75.725, though closed well off session lows. Nearby August futures sunk $1.05 to $91.15.
Fundamental analysis: Lean hog futures faced modest selling pressure, showing relative strength to the sinking cattle markets. Friday, October lean hogs began to show modest weakness, which continued today. Still, the last two sessions prices closed above the opens, a testament to the continued underlying strength of the hog market. The CME lean hog index is up another 11 cents to $93.64 as of August 1, a fresh seasonal peak. Traders anticipating a decline in the index were vindicated today, as the preliminary calculation puts the index down five cents to $93.59 tomorrow. Traders anticipate the index continues to face modest weakness into the August contract’s expiration on August 14, as the contract closed today $2.44 under tomorrow’s quote for the index. Wholesale pork prices rebounded from Friday’s weakness, as all cuts except bellies posted gains at midsession. Whole cutout was up $1.51 to $105.82 in morning trade.
Technical analysis: October lean hog futures saw modest losses though closed above this morning’s open and session lows. Bulls want to build on this afternoon’s gains to negate a potential breakdown on the daily bar chart. Resistance stands at $76.50, the former uptrend that failed on the open, with additional resistance at $76.00 on the way. Bulls are seeking to hold support at $74.775 then today’s low of $73.90 on continued weakness.
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 $3.075 to $179.00, near mid-range and hit a 2.5-month low. October feeder cattle plummeted $7.35 to $239.225, nearer the session low and hit a nine-month low.
Fundamental analysis: The cattle futures markets were hit hard today by keen risk-off attitudes in the general marketplace amid the global stock market meltdown. Recent downbeat U.S. economic data may be sapping consumer confidence that could lessen demand for beef at the retail meat counter. Speculator weak long liquidation in the cattle futures markets was featured today.
It’s important to note cash market fundamentals are often pushed aside during trading days like today, when trader/investor anxiety is running high. If the general marketplace settles down this week, it’s likely the cattle futures markets can post decent corrective rebounds quickly.
Cash cattle market fundamentals are still firm at present. Last week’s cash cattle trading price averaged $194.45, down 76 cents but not as much of a loss as some market watchers expected. We look for cash cattle prices this week to be steady-weaker. Today’s noon report showed solid gains in wholesale boxed beef cutout values, with Choice rising $4.64 to $318.41 and Select up $3.24 to $300.41. Movement at midday today was light at 42 loads. The Choice-Select spread is presently $18.00.
Technical analysis: The cattle futures bears have gained the overall near-term technical advantage amid steep downdrafts. However, both markets are short-term oversold, technically, and due for corrective bounces. The next upside price objective for the live cattle bulls is to close October futures above solid resistance at $183.00. The next downside technical objective for the bears is closing prices below solid technical support at the April low of $170.825. First resistance is seen at today’s high of $180.50 and then at $182.00. First support is seen at $177.50 and then at today’s low of $176.35. 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 contract low of $235.575. First resistance is seen at $240.00 and then at today’s high of $242.40. First support is seen at today’s low of $237.325 and then at $236.00.
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.