Price action: Lean hog futures opened under pressure but trimmed losses to close slightly higher in the June and later contracts. The lead April and May contracts finished slightly weaker. Futures closed slightly higher for the week.
5-day outlook: Cash hogs will face several negatives next week as wholesale pork prices are weakening and movement is slower than normal. Packers, who are facing negative cutting margins, have reduced operating hours to reduce losses and will be reluctant to bid prices higher next week.
30-day outlook: With rising evidence of consumer resistance and a likely top in the wholesale market, hog prices will be under pressure as they head into their normal seasonal decline in prices and rise in production. The wildcard remains the impact of the porcine epidemic diarrhea virus (PEDV) on supplies in the month ahead. The continuing climb in average slaughter weights is offsetting a portion of the reduction in numbers.
90-day outlook: The normal season trend calls for hog prices to slide lower as supplies climb into June before slipping again. However, PEDV losses will likely trim the normal seasonal rise. The unknown is by how much. Some analysts are calling for cuts of 2% to 4% while others see much steeper reductions. Meanwhile, consumer demand is key and the recent setback in wholesale pork and beef prices suggests consumers are pushing back on record high prices. This suggests it will be very difficult to press prices higher this summer.
Hedgers: 50% of expected 2nd-qtr. hog marketings and 50% of expected 3rd-qtr. Hog marketing are covered in $126.00 June lean hog put options for $3.90.
Feed needs: Carry all corn-for-feed and meal risk in the cash market for now.
Price action: Live cattle futures closed 20 to 85 cents higher through the October contract while far-deferred contracts ended slightly lower. Futures posted solid gains for the week.
5-day outlook: The bounce in price this week after a failed downside breakout from the recent consolidation range Monday signals traders aren't willing to give up bullish attitudes just yet. Therefore, followthrough buying is possible next week. But it's unlikely traders will push futures above the cash market despite tight market-ready supplies.
30-day outlook: Traders are well versed in the tightness of cattle supplies. While tight supplies limit downside risk, it's demand that's going to determine the top in the cattle market. Thus far, cash cattle bids have faced resistance above $150, while Choice boxed beef prices have seen retailer demand fade above $240.00.
90-day outlook: The grilling season is typically a strong demand period for beef, but given historically strong wholesale beef prices retailers are likely to feature more pork and poultry this year. The recent break in wholesale beef prices is attracting more retailer demand, however, suggesting they will use periods of lower prices to buy supplies for some beef features.
Hedgers: Fed cattle producers have 50% of 2nd-qtr. marketings hedged in April live cattle futures at $144.20.
Feed needs: Carry all corn-for-feed and meal risk in the cash market for now, but be prepared to extend coverage on a price break.