Hogs
Price action: Hog futures traded mixed Thursday, with nearby October edging up 20 cents to $82.25.
Fundamental analysis: Hog traders seemed ambivalent about the short-term outlook Thursday, with the nearby contracts posting slight gains and those that expire after next April declining modestly. Today’s cash and wholesale information certainly seemed supportive, as exemplified by pork cutout climbing $1.35 to $95.76 at midsession. As expected, the CME lean hog index for Tuesday was officially unchanged at $84.22 this morning. But, after having slipped recently, Wednesday’s index quote is likely to rise 16 cents to $84.38 when it’s officially quoted tomorrow. We continue anticipating short-term strength, which would partially reflect seasonal demand strength ahead of “National Pork Month” in October. Cash hog prices have a tendency to rise somewhat in September and/or early October, while the strength in pork cutout is usually more pronounced. Seasonally increasing hog supplies probably account for the difference. Still, if we’re correct in thinking flat-to-lower retail pork prices will spur added consumer buying, the short-term cash market advance could prove relatively strong. On the other hand, there’s little reason to think the market will deviate from its traditional pattern of substantial fourth-quarter weakness.
Technical analysis: Bulls retain the short-term technical advantage in October lean hog futures. Today’s action resulted in a daily high at $82.40, which now represents initial resistance. A push above that point would face stiffer resistance at the Sept. 4 high of $83.37, with a followthrough move likely to run into still stronger psychological resistance at $85.00. Initial support extends from the May 28 low of $81.80, with close backing from today’s low at $81.725. Bulls can probably expect added support around yesterday’s low of $81.275, then at the psychological $80.00 level. A breakdown below that point would open the door to a retest of the 40-day moving average near $78.15.
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 $1.675 to $179.975 and nearer the session high. Prices hit a four-week high today. October feeder cattle rallied $3.825 to $243.775 and nearer the session high. Prices hit a six-week high today.
Fundamental analysis: Technical buying in the live and feeder cattle futures markets was featured today, as the near-term chart postures for both markets has turned more bullish this week. Fundamentally, Wednesday afternoon’s aggressive interest rate cut from the Federal Reserve means lower borrowing costs for consumers in the coming months, suggesting better demand for beef at the meat counter.
Cash cattle trade has been too light to see a solid price trend ahead of Friday’s USDA Cattle-on-Feed report. That report is expected to show around 1% lower August placements than a year ago, which would suggest still-tight supplies of market-ready animals going forward. There was virtually no fed cattle trade Wednesday. The only movement was a 43-head lot of mixed steers and heifers sold for $180 in Iowa-southern Minnesota. Earlier this week, lighter cash cattle trade took place in Iowa at an average of $183.48, while a few seemingly lower-quality animals traded around $178.00 in the Iowa region. The noon report today showed wholesale boxed beef prices dropped again, with Choice grade falling $1.01 to $300.37, while Select grade fell 26 cents to $289.49. Movement at midday was good at 104 loads, showing good consumer demand for beef continues. The Choice-Select spread is presently at $10.88.
USDA this morning reported U.S. beef export sales of 15,500 MT for 2024, up 36% from the previous week and up 2% from the four-week average.
Technical analysis: The live and feeder cattle futures bulls now have the overall near-term technical advantage. Bulls are working on price uptrends on the daily charts. The next upside price objective for 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 $176.00. First resistance is seen at today’s high of $180.425 and then at $182.00. First support is seen at today’s low of $178.375 and then at $177.00. The next upside price objective for the feeder bulls is to close October futures prices above technical resistance at $250.00. The next downside price objective for the bears is to close prices below solid technical support at $235.00. First resistance is seen at today’s high of $244.10 and then at $245.00. First support is seen at $242.00 and then at today’s low of $240.40.
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.