Hogs
Price action: Lean hog futures rebounded from early losses to end 27 1/2 to 62 1/2 cents higher and in the upper portion of today’s range.
Fundamental analysis: Fundamentally, there was nothing new to support lean hog futures today. Support came from ideas the downside has been overdone, which triggered corrective short-covering. The hefty discount futures hold to the cash market was also supportive.
Cash hog bids were as much as $2 lower today on light packer demand. While cutting margins are solidly in the black, packers have little incentive to raise cash hog bids as market-ready hog supplies are abundant and packers have a reduced slaughter schedule next week.
Technical analysis: October lean hog futures posted a bullish reversal today. The contract must follow that up with additional gains tomorrow, however, to give any indication a short-term low may be in the works. Key near-term resistance is the top of the Aug. 22 gap at $75.60. Filling that gap would open around $3 in upside potential.
Hedgers: Carry all risk in the cash market for now.
Feed needs: Risk is covered in the cash market for now.
Live cattle
Price action: Live cattle futures traded in a wide range today, as the market opened under pressure but then surged higher to end with gains of 57 1/2 cents to $1.75, which was high-range for all but the soon-to-expire August contract.
Fundamental analysis: A few light cash cattle sales took place at $186 dressed in Iowa and there was unconfirmed talk of sales at $187 dressed in Nebraska. This added light support to corrective short-covering in the live cattle market. Trade has yet to get underway on the Southern Plains, however. Feedlots there may have a hard time getting prices above last week’s $120 to $121 as the boxed beef market continued its decline this morning, though movement picked up. Beef demand typically tapers following Labor Day.
Technical analysis: October live cattle ended even with psychological support at $125.50. Followthrough buying would have bulls’ eyeing the August high of $127.22 1/2.
Feeder cattle
Price action: Feeder cattle futures saw two-sided trade today and ended mid-range with gains of 10 to 32 1/2 cents.
Fundamental analysis: Strong gains in the live cattle market spilled over to the feeder cattle market, encouraging light short-covering. But that was the extent of buying interest as the corn market surged higher again today. Until feed costs decline, feeder cattle futures will struggle to find buyers.
Technical analysis: October feeder cattle futures remain in the upper half of their recent consolidated trading range, with resistance standing at the Aug. 15 high of $145.95, while initial support lies at the Aug. 22 low of $142.00.
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.
