Hogs
Price action: Hog futures continued their recent pattern of sideways action, with nearby April futures rising 7.5 cents to $87.45 and most-active June sliding 50 cents to $96.525.
Fundamental analysis: Little has changed significantly in the hog and pork complex lately, which seemed to keep hog futures confined to their recent range as well. The latest official quote for the CME hog index, as of last Friday, fell 28 cents to $88.50. Monday’s quote is expected to bounce 15 cents to $88.65, while Tuesday’s data implies another 15-cent bounce to $88.80. Meanwhile, pork cutout continues fluctuating between $95.00 and $100.00. It fell $1.94 to $95.51 Tuesday afternoon, then slipped another 54 cents to $94.97 at midsession today.
History strongly suggests the hog and pork complex will rally strongly over the next 10-15 weeks, with the move being powered by the normal seasonal hog slaughter drop to annual lows in late June or early July. Conversely, consumer demand typically surges strongly during the most-active part of the grilling season. The price of several cuts, including pork chops, pork steaks, ham steaks, ribs and sausage often rally in such circumstances, thereby powering the cash markets strongly higher. However, spring 2024 was an exception, with the market proving remarkably weak. We attribute the indicated lack of seasonal strength to grocers maintaining retail pork prices at elevated levels and stifling consumer demand last spring. We doubt that will be the case this year and remain cautiously optimistic as a result. But last year’s price action greatly increases uncertainty about the short-term outlook.
Technical analysis: Bears still own a slight short-term technical advantage in June hog futures, although their inability to sustain early losses weakened their hold. The intraday rebound kept the 10-day moving average near $96.30 as initial support, with the daily low marking secondary support at $95.225. Look for stout psychological support at the $95.00 level. Today’s high marked initial resistance at $96.675. That’s closely backed by the 20-day moving average near $97.00. Recent price action also indicates a zone of resistance between $98.00 and $98.65, with strong backing from the psychological $100.00 level and the 40-day moving average near $100.27.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You have all corn-for-feed needs covered in the cash market through April. You have all soymeal needs covered in the cash market through May.
Cattle
Price action: June live cattle rose $1.975 to $207.40, nearer the daily high and hit a contract high. May feeder cattle rose 77 1/2 cents to $287.925 and near the daily high.
Fundamental analysis: The live and feeder cattle futures markets continue to show resilience even with prices near record highs. The U.S. stock market has stabilized at mid-week, which also benefited the cattle market bulls today. Any higher anxiety in the general marketplace on Thursday would likely be a bearish element for the cattle futures markets.
Weaker corn futures prices today did support the feeder cattle futures market. The latest feeder cattle cash index quote is $286.76.
Cash cattle trade so far this week remains very light amid declining packer margins. We look for feedlots to have the upper hand in negotiations at the end of the week, when the average cash cattle trading price could reach another record high. The noon report today showed Choice-grade boxed beef down $1.34 to $340.88, while Select grade lost $2.05 to $320.02. Movement at midday was lighter at 64 loads.
Technical analysis: Live and feeder cattle futures bulls have the solid overall near-term technical advantage. Prices are trending higher on the daily bar charts. The next upside price objective for the live cattle bulls is to close June futures above resistance at $210.00. The next downside technical objective for the bears is closing prices below solid technical support at last week’s low of $199.60. First resistance is seen at $208.00 and then at $209.00. First support is seen at today’s low of $204.75 and then at this week’s low of $202.55.
The next upside price objective for the feeder bulls is to close May futures prices above technical resistance at the contract high of $290.625. The next downside price objective for the bears is to close prices below solid technical support at last week’s low of $280.70. First resistance is seen at $289.00 and then at $290.625. First support is seen at today’s low of $286.025 and then at $285.00.
What to do: Get current with feed coverage. Carry all production risk in the cash market for now.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You have all corn-for-feed needs covered in the cash market through April. You have all soymeal needs covered in the cash market through May.