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August live cattle (LEQ26) futures on Friday fell $2.65 to $224.425, hit a four-month low, and for the week were down $10.775. August feeder cattle (GFQ26) futures lost $0.65 to $345.95, closed at a five-week low close, and for the week were down $8.65.
The cattle futures markets saw still more technical selling on Friday as the bleeding continued. The technically bearish weekly low closes on a Friday again last week set the stage for follow-through chart-based selling early this week.
Lower cash trade last week also hit futures market prices. Cash cattle trading turned very active as of midday Friday, with the USDA reporting steers averaging $238.59 and heifers $238.16. That is well down from the prior week’s USDA-reported cash cattle trading average of $248.01.
Live cattle futures prices have dropped more than $20 in under a month. The multi-year bull market has paused as elevated prices have somewhat dented consumer demand, giving packers greater leverage in cash negotiations. Boxed beef values have weakened in tandem, modestly improving packer margins amid lighter summer demand.
Cattle market participants remain cautious, awaiting the next batch of data in this Friday’s USDA cattle-on-feed and cold storage reports, as well as the USDA semiannual cattle report on Friday, which will detail the mid-year inventory of all cattle and calves, including beef and dairy cows, as well as the calf crop for the year.
The stock market has been wobbly of late and gasoline prices have ticked up along with crude oil (CLQ26) following increasing military action in the Middle East. These are also potentially bearish elements for the demand side of the equation for beef at the meat counter. The New World screwworm threat, and particularly rising cases detected in the United States, may also psychologically damage consumer confidence in buying beef.
Lean Hog Futures Prices Keep Trending Up
August lean hog (HEQ26) futures on Friday rose $1.375 to $101.65, hit a seven-week high, and for the week were up $2.65.
The lean hog futures market saw more technical buying interest from the speculators on Friday amid charts that are turning more bullish as prices are in a solid uptrend on the daily bar chart.
Cash hog prices are on the rise, which is supporting buying interest in futures. The latest CME lean hog index is up 50 cents to $95.10. Today’s projected CME index price is up 55 cents at $95.65. The national direct five-day rolling average cash hog price quote for Friday was $99.80.
Wholesale and cash hog fundamentals have turned supportive, led by rising cash hog prices and BLT-season strength in bellies. Seasonally declining slaughter levels in the coming weeks would continue to provide near-term price support for cash and futures.
Pork remains more affordable at the meat counter, supporting steady consumer interest as high beef prices weigh on consumers, especially with gasoline prices on the rise again.
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On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
