Hogs
Price action: October lean hogs rose 67 1/2 cents at $76.40 and near mid-range.
Fundamental analysis: Improved risk appetite in the general marketplace today prompted some buying interest in lean hog futures. Hog traders will continue to watch the outside markets extra closely this week, as any recurrence of volatility and anxiety in the general marketplace would likely put more selling pressure on the ag markets, including livestock futures. Strong losses in cattle futures markets this week have limited buying interest in hog futures.
August hog futures continue to hold a more than $2.00 discount to the cash market, signaling some near-term pessimism from futures traders. The latest CME lean hog index is down 5 cents to $93.59 as of Aug. 2, ending a 15-day string of gains. Wednesday’s cash index price is projected down another 26 cents at $93.33. The national direct five-day rolling average cash hog price quote today is $85.60. The noon report today showed pork cutout value rose $1.44 to $105.72, with gains led by hams and bellies. Movement at midday was good at 176.56 loads.
Technical analysis: The lean hog futures bulls and bears are on a level overall near-term technical playing field amid recent choppy trading. The next upside price objective for the hog bulls is to close October prices above solid chart resistance at the July high of $78.70. The next downside price objective for the bears is closing prices below solid technical support at $72.50. First resistance is seen at today’s high of $77.50 and then at $78.70. First support is seen at $75.00 and then at this week’s low of $73.90.
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 traded on either side of unchanged before firming a nickel to $179.05. Nearby August futures rose 42.50 cents to $181.975, while deferred futures posted losses. September feeder futures sunk 67.50 cents to $240.575.
Fundamental analysis: Cattle futures opened higher but struggled to maintain early gains as sellers emerged shortly after the open. Cattle futures struggling to see higher trade despite a risk-on tone in the overall marketplace is rather concerning. The technical damage done to cattle futures over the past several sessions will be hard to shake as pessimism surrounds the market. Still, cash cattle trade started in the southern markets at $185.00. While that is down from an average of $187.21 last week, the size of the drop is small compared to the selloff seen in futures. If cash trade maintains a mildly weaker tone in the next few days, particularly in the northern market, it could spark a bid in futures, especially considering the turnaround in outside markets today. Wholesale beef dipped this morning following stronger trade on Monday, as Choice beef sunk $2.25 to $315.69, and Select fell 42 cents to $299.64. Movement was strong this morning at 106 loads, more than Monday’s total for the whole day.
Feeder cattle futures continue to undergo strong selling pressure despite just modest weakness seen in the feeder cattle index. Similar to fats, the cash feeder market has yet to reflect the sharp selling pressure seen in futures, which may give way if the cash market continues to hold up into the end of the week, particularly in nearby August futures.
Technical analysis: October live cattle futures traded within yesterday’s range, consolidating from the recent leg lower. Bulls struggled to overcome initial resistance at the psychological $180.00 mark. Strength above there seeks to overcome firm resistance at $182.075. Bulls have significant work to do to earn back the technical edge. Support stems from $179.00 with further selling seeking to overcome support at today’s low of $177.525.
Volume remains quite high in September feeder cattle futures, with volume exceeding half of open interest each of the last four sessions. While some of that increase in volume can be attributed to traders rolling positions from the August contract, the fact that prices held up for the most part today while volume was high showcases buyers stepping into the market. Bulls are seeking to overcome stiff resistance at $244.20 with additional resistance at $243.30 on the way.
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.