Hogs
Price action: Lean hog futures settled at or near session highs with gains of 10 to 82 1/2 cents.
Fundamental analysis: Lean hog futures enjoyed short-covering as traders worked to narrow the discount futures hold to the cash hog index. The index was most recently pegged at $81.89, while the October contract settled at $74.15 today.
But outside of technical buying, interest in futures is limited as supplies are expanding seasonally -- even more so than usual due to high feed costs. Plentiful supplies have in turn weighed on the cash and pork markets.
Technical analysis: October lean hog futures traded up to psychological resistance at $74.50 today. Penetration of that level on followthrough buying tomorrow would have bulls eyeing the top of the Aug. 22 downside gap at $75.60. Contract-low support stands at $72.30.
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 ended mid- to low-range with the August contract up 25 cents, October futures steady, and deferred months steady to 32 1/2 cents lower.
Fundamental analysis: Live cattle futures chopped sideways today as traders are still waiting for cash cattle trade to begin. When it does, volume will likely be light as packers will be preparing for a holiday-shortened week.
Boxed beef prices have steadily declined this week, which could make it difficult for feedlots to get prices steady with last week’s $120 to $121 trade. Plus, traders are aware that beef demand typically fades following Labor Day.
Technical analysis: October live cattle ended even with psychological support at $125.50 for the second day in a row, marking it as an important level of resistance. A close above this level would open the door for trade up to the August high of $127.22 1/2. The August low of $123.40 is support.
Feeder cattle
Price action: Feeder cattle futures ended narrowly mixed, with nearbys favoring the downside. This was a low-range close.
Fundamental analysis: Choppy action in the corn market led to similar trade in feeder cattle futures today. High feed costs continue to limit demand for feeder cattle futures, but traders are optimistic that a pullback in prices lies in the near future. Plus, the feeder cattle cash market has given signs of stabilizing recently.
Technical analysis: October feeder cattle futures saw an inside day of trade, leaving resistance at the Aug. 15 high of $145.95, while near-term 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.
