Hogs
Price action: October lean hogs fell 5 cents at $74.775, near the mid-point of today’s range.
Fundamental analysis: The lean hog futures market today paused after Monday’s big downdraft in prices. Hog market bulls are disappointed with futures price action so far this week, especially given the improving cash market fundamentals. The latest CME lean hog index is up another 44 cents to $92.29 as of July 26, matching the mid-May high and marking the 11th straight daily gain. Wednesday’s projected cash hog index price is up another 30 cents at $92.59, a new seasonal high. The national direct five-day rolling average cash hog price quote today is $82.93. August lean hog futures today again closed below the cash index, suggesting traders are still expecting the cash index to weaken before the contract’s expiration August 14. The noon report today showed pork cutout value rose 14 cents to $106.92, led by gains in bellies. This marks the highest price in nearly a year. Movement at midday was good at 164.65 loads. The rise in pork cutout value has kept pork packer margins in the black, giving them incentive to keep paying up for hog supplies.
Technical analysis: The lean hog futures bulls have lost their overall near-term technical advantage. A fledgling uptrend on the daily bar chart has been negated. 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 $71.00. First resistance is seen at today’s high of $75.60 and then at $77.00. First support is seen at $74.00 and then at $73.00.
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 corn-for-feed and soymeal needs covered in the cash market through August.
Cattle
Price action: October live cattle futures firmed 65 cents to $187.45 while nearby August futures rallied 72.5 cents to $187.70. September feeder cattle futures rose 87.5 cents to $256.95.
Fundamental analysis: Live cattle futures traded on either side of unchanged before closing higher on the day. Losses stalled near the early July highs which will continue to act as solid support. Traders are apparently awaiting fresh data from the cash market as recent gains have stalled out, though a three-and-a-half-month uptrend persists on the daily bar chart. Initial cash cattle trade took place Monday in the southern market at $188.00, down about $2.00 from a week ago. The pattern the last couple pf week has been for weak action earlier in the week followed by higher trade to finish the week out. Trade is likely to be pushed late in the week again as packer margins remain deep in the red, as they hope for weakness in futures to discourage feedlots into taking lower bids. Meanwhile, wholesale beef prices continue to rebound and were most recently quoted 91 cents higher to $315.72 in Choice and $1.84 higher in Select to $303.36. Select cuts continue to boast relative strength over Choice, but movement was relatively light this morning at 54 loads.
The feeder cattle index continues to struggle building strength following the July 15 peak. The index is most recently quoted 9 cents lower to $258.75. Futures are now prices in modest declines through November before weakness intensifies, a start contrast to the past month when traders were anticipating sideways action through the fall. Any resurgent strength in the index could quickly put traders offsides and lead to strength in futures.
Technical analysis: October live cattle futures rebounded after heavy selling pressure on Monday. Bulls continue to retain the near-term technical advantage. Initial resistance stems from $188.00 and is reinforced by last Thursday’s for-the-move high of $189.05. Support comes in at the 10-day moving average at $186.40, which capped losses the past two sessions. Further selling eyes support at $185.575.
September feeder cattle futures posted modest gains though are trading nearer recent lows. Neither bull nor bear holds the near-term technical advantage. Bulls are seeking to overcome initial resistance at $257.55, the 10-day moving average, which is reinforced by Friday’s close of $259.60. Support stems from today’s low of $255.10 then the July low of $253.85.
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.