Hogs
Price action: Hog futures continue anticipating sizeable seasonal losses. The nearby October contract fell 85 cents to $78.90 at the close.
Fundamental analysis: The cash hog market’s inability to sustain last week’s upward blip in the hog index seems to be spurring increased selling of nearby futures, with the market once again building sizeable discounts into the fall and winter contracts. The index is declining minimally, as indicated by Tuesday’s official drop of 10 cents to $85.46 and Wednesday’s preliminary figure skidding another 11 cents to $85.35. Bears are likely being encouraged by wholesale weakness, especially after the Wednesday afternoon quote for pork cutout, at $92.91, marked its lowest level since last spring. Conversely, it rebounded $1.97 to $94.88 at midsession today, which may provide short-term support, especially if the wholesale market repeats its recent Friday habit of rising substantially. This could prove particularly true if pork cutout repeats its long-term habit of rising from early September into mid-October.
The latest CPI data also seems supportive of ideas consumer demand will remain strong. August retail pork prices were essentially unchanged from July, but up 1.8% from year-ago. However, retail prices rose significantly in September and October of the past two years, which seemed to strangle fourth-quarter pork demand. If we’re correct in thinking grocers are committed to more aggressive pork features this fall, the resulting demand strength could limit the size of the usual breakdown in cash hog prices.
Technical analysis: Although bulls still seem to hold the short-term technical advantage in nearby October hog futures, today’s bearish reversal favored the bears. The drop made the 20-day moving average near $79.50 initial resistance, with backing from the psychological $80.00 level, the daily high of $80.15, then the 10-day moving average near $80.49. Today’s low represents initial support at $78.875 and is backed by Wednesday’s and Tuesday’s lows at $78.475 and $78.20, respectively. A drop below the latter point would have bears targeting the pivotal 40-day moving average near $77.56, then the psychological $75.00 level.
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 rose $1.075 to $178.025 and near mid-range. October feeder cattle gained $2.25 at $239.75, nearer the session high and hit a four-week high.
Fundamental analysis: Live and feeder cattle futures markets today saw short covering and perceived bargain hunting buying from the speculators. The bulls late this week are reckoning cash cattle trading could see a higher average price for the first time in weeks. There was no trade Wednesday in Nebraska or Iowa. Texas-Oklahoma traded 663 steers at a price of $181.00, which is unchanged from last week. Kansas traded 1,869 head at $180.18, also virtually unchanged from a week ago. Packers have bolstered margins in the black with the string of lower cash cattle prices, giving them some room to raise bids if needed.
Today’s noon report showed wholesale boxed beef cutout value for Choice grade up 44 cents to $307.80, while Select grade gained $1.44 to $295.82. Movement at midday was good at 77 loads. The Choice-Select spread stands at $11.98.
USDA this morning reported U.S. beef export sales of 11,400 MT for 2024, down 31% from the previous week and down 41% from the four-week average.
Technical analysis: The live and feeder cattle futures bulls and bears are on level overall near-term technical playing fields. The next upside price objective for the live cattle bulls is to close October futures above solid resistance at $182.525. The next downside technical objective for the bears is closing prices below solid technical support at the August low of $173.725. First resistance is seen at today’s high of $178.80 and then at $180.00. First support is seen at today’s low of $177.225 and then at $176.00. The next upside price objective for the feeder bulls is to close October futures prices above technical resistance at $243.45. The next downside price objective for the bears is to close prices below solid technical support at the August low of $229.35. First resistance is seen at today’s high of $240.575 and then at $242.00. First support is seen at today’s low of $237.525 and then at $235.00.
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.