June live cattle finished down $3.40 last week, ending at $119.17. The June contract is down from its April high of $125.62 and from the 2019 high of $124.90 -- a prominent area of resistance that may take time for prices to punch through. Technically, the 2019 high might normally be a candidate for ending the rally, but fundamentally cattle prices still have bullish arguments on their side. After rebounding from an extremely bearish situation in 2020, cash cattle prices in the North are now trading at their highest level since coronavirus erupted in early 2020. Choice boxed beef prices are their highest since last summer, making room for more packer demand. Noncommercial net longs in cattle total 90,303 as of April 13, 2021, a significant position, but not nearly as large or dangerous as the 150,290 contracts held at the time of the 2019 high. As long as June cattle prices hold above $117.40, the site of the 100-day average, the trend in June live cattle remains up.
August feeder cattle fell $5.40 last week to $154.55, the lowest close in a month. On a weekly chart of August feeder cattle prices, the 2017 high of $163.50 stands as the five-year high and last week's high of $162.40 is the closest prices have come to it so far. Feeder cattle prices have been supported lately by a strong rebound in beef demand and the recent rally in cash cattle prices. At the same time, feeders are contending with rising cash corn prices and this year's lower supplies of feed corn. As with live cattle futures, the weekly stochastic on August feeder cattle has turned lower, but I can't say the trend has turned down until August feeder cattle close below the 100-day average at $152.00. Noncommercials are net long 6,853 contracts as of April 13, not enough to be considered a significant bearish threat.
June lean hogs closed down $3.40 last week to $119.17, the lowest close in three weeks and a quick drop after hitting $125.62 last week, the highest peak in over six years. It's not a surprise to see hog prices turn volatile as Friday's CFTC report showed noncommercial net longs at 85,207 as of April 13, the largest such position since 2014. It is going to take more than one week of lower prices to turn this trend down, however, and the 100-day average is far below at $90.80. Last week's export sales of pork hit a new marketing year low and China's national hog price is down roughly a third from the start of the year. It is difficult to get an honest assessment of pork production in China, but here in the U.S. cutout values are near last year's highs and reflect strong retail demand. For now, the trend remains up in June hogs.
Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of livestock and livestock futures involve substantial risk and are not suitable for everyone.
Todd Hultman can be reached at: Todd.Hultman@dtn.com
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