Live cattle Price action: Live cattle futures settled 12 1/2 to 42 1/2 cents lower in all but the front-month August contract, which ended 27 1/2 cents higher.
Fundamental analysis: Live cattle futures were generally pressured by ideas the beef market was working on posting a near-term high. Beef prices were mixed again this morning, but movement improved to 150 loads. General expectations are still for at least steady cash cattle trade with last week’s $120 to $121 given this week’s tighter showlist, but bids and asking prices remain several dollars apart.
Technical analysis: October live cattle futures gapped slightly lower on the open, filled the gap, but ended near opening levels. Support lies at the August low of $123.60 and extends to the April low of $119.77 1/2. Resistance stands at last week’s high of $127.22 1/2.
Feeder cattle
Price action: Feeder cattle futures ended 42 1/2 to 70 cents higher, which was near session highs.
Fundamental analysis: Much of today’s support was tied to weakness in the corn market, which encouraged some short-covering in feeder futures. Traders are also well aware that calf supplies have tightened dramatically, but are concerned demand for feeders will remain lackluster given historically high feed prices.
Technical analysis: The near-term boundaries for September feeder cattle futures are contract-low support of $136.15 and last week’s high of $145.12 1/2.
Hedgers: Fed cattle producers should carry all risk in the cash market for now. Feeder cattle sellers and buyers should also carry all risk in the cash market for now.
Feed needs: Risk is covered in the cash market for now.
Hogs
Price action: Lean hog futures saw sharp price pressure today, with sell stops triggered to extend losses from the gap-lower start. Futures ended $1.00 to $2.65 cents lower, with nearbys leading the decline.
Fundamental analysis: Early pressure was tied to weakness in the pork cutout market, as values slipped $2.09 yesterday -- raising demand concerns. While packers’ profit margins remain in the black, they tightened on the drop in pork values, causing packers to lower bids by up to a dollar today. Early expectations are for more of the same in the cash market tomorrow.
Meanwhile, nearby lean hog futures have widened the discount they hold to the cash index, which is projected at $88.65 tomorrow. Traders are comfortable with a hefty discount to the cash market as they see supplies building near-term.
Technical analysis: October lean hog futures plunged to a fresh contract low of $73.10 today and closed just off the low. The contract is at risk of followthrough pressure tomorrow, although it has moved into oversold territory according to the 9-day Relative Strength Index.
Hedgers: Carry all risk in the cash market for now.
Feed needs: Risk is covered in the cash market for now.
