Hogs
Price action: Hog futures resumed their recent advance Friday. Nearby August ended the day 20 cents higher at $91.575, while the deferred contracts posted sizeable gains. August futures ended the week having risen $2.125 since last Friday.
5-day outlook: Hog traders seemingly anticipate much improved grocer and consumer demand for pork during the second half of 2024, as best exemplified by the sizeable gains posted by the deferred contracts since last Thursday. The nearby August contract has also risen lately, but today’s minimal rise suggests traders don’t expect much more short-term upside for the cash market (or they think the cash market will set back from a short-term top by mid-August). October hog futures are trading significantly below cash quotes at last year’s expiration (around $80.00), but December futures near $67.00 are priced near par with their mid-December 2023 quotes despite broad expectations for a likely 1%-2% annual rise in hog supplies.
30-day outlook: The various pork cuts posted across-the-board gains Friday morning, with the net result being a $2.49 surge to $102.74 in wholesale pork cutout values. A sizeable Friday advance has become quite common in recent weeks, although most of those events also saw pork cutout fall just as sharply early the week following. Wholesale price action will probably play a big role in late-summer hog/pork pricing. That is, if consumer demand does improve significantly, that will likely show up as surprising wholesale strength. Conversely, slumping pork quotes could weigh heavily upon the complex.
90-day outlook: Those optimistic about the fall-winter outlook may also be expecting a low range result on hog and pork supplies. That would represent a divergence from the pattern of general 2%-3% annual increases in hog numbers since early last year. This week’s estimated slaughter continued that pattern, with the weekly total of 2.372 million head topping the comparable year-ago result by 44,500 head (1.9%). We are cautiously optimistic, due largely to ideas grocers plan to feature pork more aggressively this fall. In the absence of such a move the complex could prove vulnerable to significant seasonal losses.
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 soymeal needs covered in the cash market through mid-August. You should have all corn-for-feed needs covered in the cash market through July.
Cattle
Price action: August live cattle futures rose 85 cents to $183.10, nearer the session high and on the week up 72 1/2 cents. August feeder cattle futures fell 62 1/2 cents to $255.60, nearer the session high and for the week down $3.05.
5-day outlook: The cattle futures bulls this week worked to stabilize their markets following the early-July sell off. Trading this week was choppy and sideways. Traders early next week will take direction from this afternoon’s monthly USDA cattle-on-feed report. Analysts expected the agency to show on-feed numbers up 1.1% from a year ago. Placements were seen down 2.8%, with marketings down 8.3%.
Cash cattle trading has occurred in the northern market at around $196.00 so far this week. The southern market saw trade around $187.50 to $188.00, so far. The dressed market in the north Thursday afternoon around $2.00 below last week’s level. The noon report today showed lower boxed beef cutout values. Choice-grade fell $2.02 to $314.13, while Select dipped 45 cents to $299.01, narrowing the Choice/Select spread to $15.12. Movement at midday was again strong at 105 loads.
30-day outlook: Solid consumer demand for beef at the meat counter, evidenced by recent solid boxed beef movement, will likely continue to support the cattle and beef markets. Retailers have actively featured beef due in part to wholesale prices remaining below year-ago levels. However, cattle market bulls will have to fight off the seasonal tendency for cash market weakness following the Fourth-of-July holiday.
90-day outlook: Despite this week’s sell off in the U.S. stock market, the stock indexes remain elevated as the Nasdaq and S&P 500 indexes hit record highs earlier this month. The marketplace this week has factored in a 100% chance the Federal Reserve will lower U.S. interest rates in September, amid mostly tame inflation reports recently. All of the above constitute a bullish recipe for the beef and cattle markets by suggesting upbeat consumer attitudes heading into the fall that will likely mean continued better demand for beef.
What to do: Get current with feed advice. Carry all production risk in the cash market for now.
Hedgers: Get current with feed advice. Carry all production risk in the cash market for now.
Feed needs: You should have all soymeal needs covered in the cash market through mid-August. You should have all corn-for-feed needs covered in the cash market through July.