Hogs
Price action: Hog futures ended on a mixed note, with nearby October skidding 2.5 cents to $82.225. The closing quote represented a weekly advance of $3.775.
5-day outlook: This week’s late action, particularly the lack of price direction, implies traders feel comfortable with current futures pricing and are waiting for some decisive news likely to push the market one direction or the other. The cash market has essentially stalled; after having spent the previous two days at $84.22, it is now officially quoted at $84.38 for Wednesday, which matched last Friday’s published figure. Thursday’s preliminary calculation puts it two cents lower at $84.36. Meanwhile, pork cutout has fluctuated around $95.00, slipping 31 cents to $94.50 at midsession today. This week’s hog slaughter total proved surprisingly small. The USDA estimate at 2.503 million head, down 2.3% from last week and 1.5% below year-ago, which raises questions about the supply outlook to be published when the USDA posts its quarterly Hogs & Pigs report next Thursday afternoon. Traders are likely expecting it to indicate 1%-2% annual supply increases for the coming months.
30-day outlook: It isn’t uncommon for cash hog and wholesale pork prices to rally from early September into early-to-mid-October. Such instances often occur in the wake of a big midsummer breakdown. However, we believe the consumer demand strength (enabled by grocers more actively featuring pork) seen after Independence Day, could persist well into fall, which in turn could provide considerable support for cash and wholesale prices. Conversely, seasonally increasing hog supplies and diminished fall pork demand routinely undercut the whole complex from mid-October into the end of the year. The October and December contracts imply modest downside price potential during that time.
90-day outlook: The late-year outlook at least partially depends upon the strength of the ham market, which in turn is somewhat dependent upon frozen ham stockpiles. Ending-July stocks were at their lowest midsummer levels since 2020, which seemingly bodes well for ham prices during the holiday season. We’ll learn more when the USDA releases its monthly Cold Storage report at the same time as it does the Hog report. We suspect it will prove supportive of the ham price outlook, but that remains to be seen.
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 rose $2.50 to $182.475, near the session high and hit a five-week high. For the week, October cattle rose $4.875. October feeder cattle futures gained 12 1/2 cents to $243.90, near mid-range and scored a six-week high. On the week, October feeders were up $4.775.
5-day outlook: The live and feeder cattle futures bulls have a very good week, including today’s technically bullish weekly high closes that suggest follow-through, chart-based buying interest early next week. Both markets this week also re-established bullish price uptrends on the daily bar charts. It also appears the cash cattle market fundamentals have at least stabilized after recent deterioration. Cash cattle trade so far this week has been too light to see a solid price trend ahead of this afternoon’s monthly USDA Cattle-on-Feed report. That report is expected to show slightly larger inventories but a decline in placements. The noon report today showed wholesale boxed beef prices rebounding, with Choice grade up $1.11 to $300.67 and Select grade up $1.33 to $289.59. Movement at midday was 82 loads. The Choice-Select spread is presently $11.08.
30-day outlook: Cash cattle prices may see a mild setback early this autumn, amid a seasonal decline in consumer demand for beef. October is National Pork Month, which will likely see grocers featuring more pork specials to lure consumers visiting the meat counter. However, the cash cattle market still may have posted a seasonal low. There are still relatively tight fed cattle and beef supplies and consumer demand heading into autumn has been surprisingly strong.
90-day outlook: This week’s aggressive 0.5% interest rate cut by the Federal Reserve should in the coming months boost consumer confidence amid lower borrowing costs and heretofore reduced inflation. Better consumer confidence regarding their pocketbooks likely means increased demand for beef at the grocery store. The U.S. stock indexes are more than half-way through the month of September and have seen solid gains for a month that typically can be rocky for stock and financial markets. If the same holds true for the historically turbulent month of October, cattle and beef markets should continue to perform well into the end of the year.
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.