October live cattle futures (LEV26) on Friday fell $0.20 to $218.875, ending the week up $2.95. November feeder cattle futures (GFX26) rose $3.90 to $331.975 and ended the week up $13.975. The cattle futures markets traded mixed Friday, with live cattle seeing buying interest limited by slightly lower cash trade taking place. Technical buying was featured in feeders.
The USDA at midday Friday reported moderately active cash cattle trading on the week, with steers averaging $220.75 and heifers $220.61. The agency reported average cash cattle trading the week prior at $221.87.
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Better wholesale beef demand has aided the rebound in futures gains. The firmer wholesale trade is a sign that packers can still sell higher-grading product. However, rising input costs, including record-high diesel and higher interest rates, will weigh on feedlot margins and bids for replacement cattle. While near-term supplies remain tight, cattle futures traders will continue to monitor beef imports as well as U.S. consumer demand, which has been resilient in recent months.
Live cattle and feeder futures prices have been supported by the recent USDA monthly cattle-on-feed report that pegged August placements and marketings at record lows. Inventories were still up 1%, which is a sign operators are feeding cattle longer even as replacement supplies tighten. The USDA data leans price-bullish for futures in the coming months, amid a small U.S. beef cow herd, eight years of drought-forced liquidation and a tight calf crop. Feeder cattle are also scarce, so feeder futures often lead when placements collapse.
Lean Hog Futures Still in Technical Trouble
On Friday, October lean hog futures (HEV26) fell $0.975 to $78.225 and were up $0.125 for the week. The hog futures market saw more technical selling pressure as prices remain trapped in a downtrend on the daily chart. Cash hog prices have also been trending down. The latest CME lean hog index is down $0.27 to $82.20. Monday’s projected CME index price is down $0.44 at $81.76. The national direct five-day rolling average cash hog price quote for Friday was $79.84.
Lean hog futures prices are not far above their lowest levels in more than a year as wholesale pork values recently dropped to multi-year lows. Hog slaughter is above year-ago levels and average hog weights have edged higher, leaving the market with ample pork supplies. These are bearish fundamental headwinds that will continue to limit the upside in hog futures in the coming weeks.
