Hogs
Advice: We advise livestock producers to extend corn-for-feed coverage by one month in the cash market through August. We also advise extending soymeal coverage another two weeks in the cash market through the end of August.
Price action: August lean hog futures firmed 12.5 cents to $93.775 and settled nearer session highs. Deferred contracts posted stronger gains.
Fundamental analysis: Lean hog futures tumbled on this morning’s open though they rebounded as the session went on, closing higher on the day. Strengthening cash fundamentals continue to support futures as the CME lean hog index is up another 28 cents to $90.08 as of July 22. The preliminary calculation puts the index for Tuesday up 69 cents to $90.77, which would be the biggest daily gain since April 11. Strength in the cash market today encouraged traders that contra-seasonal strength will continue, as evidenced by the reversal from this morning’s early dive. Wholesale pork rebounded from yesterday’s losses this morning, as pork cutout firmed 21 cents to $103.71, driven higher by strength in loins and bellies, though losses in ribs and hams limited gains. Improved retailer demand is a likely driver of the recent strength in hog and pork prices, but how long prices can stay elevated is up to question. August futures imply strength through the contract’s mid-August expiration, while sustained weakness is currently expected into the fall as pork production surges on a seasonal basis.
Technical analysis: August lean hog futures sank on this morning’s open though they later rebounded and closed nearer session highs as bulls continue to own the near-term technical advantage. Bulls scored a fresh for-the-move high today. Additional strength faces resistance at the 100-day moving average at $94.85, which is quickly backed by the psychological $95.00 mark. Further strength seeks to overcome former support, now resistance at $96.00. Support lies at today’s low of $92.975, which is reinforced by $92.50, then the 10-day moving average at $91.50.
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: NEW ADVICE -- Extend corn-for-feed coverage by one month in the cash market through August. Also extend cash soymeal coverage another two weeks through the end of August.
Cattle
Advice: We advise livestock producers to extend corn-for-feed coverage by one month in the cash market through August. We also advise extending soymeal coverage another two weeks in the cash market through the end of August.
Price action: Nearby August live cattle futures edged higher Wednesday, rising 60 cents to $186.90, whereas the 2025 contracts declined. That may have reflected sizeable losses suffered by feeder futures, where nearby August fell $1.625 to $257.125.
Fundamental analysis: A few hundred head of fed cattle changed hands in the $187.00 (Kansas) to $188.00 (Texas-Oklahoma) range Tuesday. The average price at $187.25 marked a $2.46 weekly drop, but that largely reflected the fact that last week’s early trade occurred in the north. Given the bullish reaction to last Friday’s Cattle on Feed report, we would argue it’s too early to call for across-the-board cash market losses this week, although wholesale slippage may be giving packers the edge in cash market negotiations. Choice cutout had slipped 23 cents to $313.21 Tuesday, then crept up nine cents to $313.30 at noon today. Having Choice cutout about $17.00 below its early-July high won’t help bulls either, although the comparatively wide Choice/Select spread, at $18.29 at midsession, still implies comparatively tight supplies of high-quality beef. Don’t be surprised if grocers become more aggressive in pursuing beef in early August as they start building inventories for planned Labor Day features.
Meanwhile, fresh grain market strength, along with recent soybean meal gains, imply increasing feed costs. That probably caused Wednesday’s drop in feeder futures. Having the feeder index, which futures cash-settle against, drop about $4.00 from its July 15 high of $261.88 isn’t helping the bullish cause either.
Technical analysis: Bulls still own the short-term technical advantage in August live cattle futures. Today’s rise established initial resistance at the daily high of $187.15, with close backing from its July 5 high of $188.25. Look for stiff psychological resistance at $190.00 as well, although a breakout above that point would likely have bulls targeting the hugely important $200.00 level. Today’s low marked initial support at $185.97. Added support is heavily layered between the psychological $185.00 level and the 40-day moving average near $182.38.
Bears seem to hold a slight short-term technical advantage in August feeder futures, since today’s drop carried the market price below all commonly followed moving averages. The 10-day moving average comes in at $257.49, the 40-day moving average is at $258.38 and the 200-day moving average is at $257.59. Those are backed by today’s high of $259.10, as well as the psychological $260.00 level. Initial support at today’s low of $256.275 is backed by yesterday’s low of $255.625 and last Friday’s bottom at $253.875. A drop below the latter would have bears seeking to test the psychological $250.00 level.
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: NEW ADVICE -- Extend corn-for-feed coverage by one month in the cash market through August. Also extend cash soymeal coverage another two weeks through the end of August.