Hogs
Price action: October lean hog futures sunk 70 cents to $78.80 and settled nearer session lows.
Fundamental analysis: Lean hog futures continue to undergo persistent selling pressure as cash prices resumed their seasonal downtrend. After a brief stint higher last week, the CME lean hog index fell 19 cents to $89.24 as of Sept. 5. The preliminary calculation puts the index down 50 cents to $85.74 tomorrow, which would be a new for-the-move low and the lowest quote since April 2. The resumption of the seasonal downtrend in the index has spurred selling in futures, quickly widening discounts that futures hold the index. Rebounding pork prices did support futures this afternoon. After facing weakness last week, pork prices have rebounded the past couple of days, most recently climbing $1.78 to $97.88 at midsession. All cuts except hams (which saw the greatest gains on Friday) posted gains this morning. Movement was solid at 164.45 loads, continuing that trend from last week, as grocers are likely stocking up for National Pork Month in October.
Technical analysis: October lean hog futures closed lower for the fourth consecutive session today, the worst string of losses since early July. Despite recent weakness, bulls continue to hold the technical advantage, as the uptrend from the July low remains intact. Initial resistance stands at $79.24, which is backed by the psychological $80.00 mark, then the 10-day moving average at $80.20. Support stems from the 40-day moving average at $78.10. Bulls are ultimately seeking to hold uptrend line support at $77.00.
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 settled $1.75 higher at $176.925, nearer session highs. October feeder cattle futures climbed $3.775 to $234.725.
Fundamental analysis: Live cattle futures surged higher despite confirmation of another week of lower cash cattle trade. Last week’s cash cattle average dropped another $2.63 to $181.18, the sixth consecutive weekly decline. Cash cattle sources expect an interim low in the cash market is close at hand, though traders are likely to remain conservative, awaiting confirmation of higher cash trade before narrowing premiums to the cash market. October live cattle futures continue to trade at a staunch discount to the cash market, which likely spurred some of the profit taking seen today. Beef trade at mid-morning was fairly supportive, with Choice rising 20 cents to $309.61 and Select surging back above the psychological $300.00 mark, rising $3.94 to $300.16. Movement was fairly light at midsession at 57 loads.
Feeder cattle futures led the way lower last week and led the reversal today. Strength in feeders despite concurrent gains in both corn and meal is a healthy sign for the market. The feeder cattle index rebounding likely played a role in futures strength today, as the index is most recently up 91 cents to $242.18, a healthy premium to futures which could limit selling in the coming week.
Technical analysis: October live cattle futures saw a volatile day of trade before closing solidly higher. Bulls struggled to overcome Friday’s highs as bears maintain the technical advantage. First resistance stands at the 10-day moving average at $177.60 with further strength looking to overcome resistance at $177.90 then $178.40. Support stems from Friday’s close of $175.175 then today’s low of $173.775.
October feeder cattle futures saw strong gains today but bears continue to hold the technical advantage. Bulls are seeking to close prices above resistance at $235.70 before tackling the 20-day moving average, which capped gains last week and the prior week, currently at $237.75. Support comes in at $234.125 then the Aug. 21 contract low at $229.35.
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.