Hogs
Price action: August lean hogs closed up $1.275 at $93.65, nearer the session high and hit a seven-week high.
Fundamental analysis: Improving cash hog and fresh pork market fundamentals and friendlier price charts are fueling the present, impressive rally in the hog futures market.
The latest CME lean hog index quote is up another 9 cents at $89.80, as of July 19, marking the sixth straight daily gain and the longest daily gain streak since April. Wednesday’s projected cash hog index price is up another 28 cents to $90.08. August futures are now trading $3.85 above the cash index, which may limit speculator buying interest in hog futures in the near term. The national direct five-day rolling average cash hog price quote today is $83.84.
The noon pork report today showed cutout value down 39 cents to $104.13, led by losses in butts and picnics. Movement at midday was 185.57 loads. Fresh pork prices have been supported recently by better grocer demand as BLT season is in full swing.
Technical analysis: August lean hogs today saw prices gap higher on the daily bar chart and hit a seven-week high. The bulls have gained the overall near-term technical advantage. Prices are now in a fledgling uptrend on the daily bar chart. The next upside price objective for the hog bulls is to close August prices above solid chart resistance at $97.50. The next downside price objective for the bears is closing prices below solid technical support at $88.00. First resistance is seen at today’s high of $94.075 and then at $95.00. First support is seen at $92.475 and then at $91.00.
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 surged $2.375 higher to $186.30 and settled on session highs. August feeder cattle futures jumped $2.35 to $257.75 and closed nearer session highs.
Fundamental analysis: Cattle futures surged higher, breaking out of the recent sideways range, posting a bullish breakout. The relative strength seen in the cash cattle market did little to support futures over the past two weeks, though prices pushed heavily on resistance the past couple of session with prices breaking out today with seemingly little catalyst. While cash cattle prices fell 57 cents last week, traders have anticipated steeper drops, evidenced by August futures trading over $8 below last week’s average. That is likely to continue to support futures as the August contract nears expiration, barring any sustained drop in cash cattle prices, which does not seem likely at this juncture. Wholesale beef prices were mixed at midsession as Choice cutout paused the recent slide, firming 35 cents to $313.79. Select dipped 18 cents to $298.15. While price action was mixed, movement was firm at 83 loads. The recent weakness in wholesale beef has pressure packer margins, which are currently estimated at a $58.50 loss per head, according to Hedgersedge.
Feeder cattle futures continue to trade in a wide, sideways range. The feeder cattle index was most recently quoted $1.44 lower to $257.74, down about $4 from the mid-July peak. The outlook for feeders remains quite opaque, as futures out to November are all within a dollar of the index, showing the uncertain outlook for feeders in the interim.
Technical analysis: August live cattle futures broke out higher and traded at the highest mark since July 8. Today’s surge in futures renders the near-term technical advantage to the bulls. Resistance stands at the June 26 close of $186.75 then the July high at $188.25. Bulls are seeking to hold support at $185.425, the psychological $185.00 mark, then the 10-day moving average at $183.85 on a reversal lower.
August feeder cattle futures surged higher today though persist in a sideways trading pattern. Bulls’ initial objective is overcoming resistance at $259.50, which is reinforced by last week’s high of $260.25. Meanwhile, support lies at $257.50 then $255.60, with further selling eyeing last week’s low of $253.875.
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.