Cattle Prices Are at Multi-Week Highs as Lean Hogs Sink to a Contract Low. What to Watch Next.

December live cattle (LEZ26) futures on Friday surged $3.50 to close at $227.05 and hit a two-month high. For the week, December live cattle gained $5.575. November feeder cattle (GFX26) futures Friday gained $7.075 to $341.95, hit a nearly three-month high, and for the week were up $10.80. The cattle futures markets saw serious technical buying kick in to end last week, as the chart-based speculators know the near-term price uptrends are the bulls’ friends in both markets. The big drop in corn futures prices on Friday following a bearish WASDE report from USDA also boosted feeder cattle futures.

The USDA at midday Friday reported more active cash cattle trading late last week, with steers averaging $219.10 and heifers $219.91. The agency reported average cash cattle trading the week prior at $219.80. 

Cattle futures markets have been supported by tighter supplies of market-ready animals and steady packer demand. Boxed beef values have edged higher as retailers have restocked ahead of seasonal promotions. Limited placements in recent months and improved pasture conditions have slowed the flow of cattle into feedyards, also keeping nearby supplies snug.

Longer-term supply and demand fundamentals for the cattle and beef markets remain solid. The latest USDA monthly cattle-on-feed report showed August placements and marketings at record lows. The COF report suggested a long cycle favors the bulls in the coming months: a small U.S. beef cow herd, years of drought in the Plains, forced liquidation, and a tight calf crop. 

Lean Hog Futures Bears Are in Control Amid Price Downtrend

December lean hog (HEZ26) futures on Friday fell $0.775 to $67.825, hit a contract low, and for the week were down $2.30. The hog futures market saw technical selling pressure amid firmly bearish charts, including Friday’s bearish weekly low close in December futures. Futures prices remain trapped in a downtrend on the daily bar chart. The CME cash hog index and cash hog prices continue to trend down, also.

The latest CME lean hog index is down 50 cents to $78.41. Today’s projected CME index price is down another 80 cents at $77.61. The national direct five-day rolling average cash hog price quote for Friday was $75.01. 

Pork cutout values slipped to the lowest levels since early 2023 earlier in the month on soft wholesale pork demand. Ample frozen U.S. pork stocks and cheaper alternative proteins continue to overshadow pork at the meat counter. Heavier carcass weights have offset much of the year-over-year decline in hog inventories.

Managed money in lean hog futures remains heavily short (on one side of the boat), which could fuel a short-covering bounce if product values firm. However, a sustained recovery depends on clearer evidence that smaller hog supplies are tightening pork production.

Holiday demand for hams from grocers may be supportive for lean hog futures, while frozen pork stocks, export sales, and the December USDA Hogs & Pigs report are fundamentals to digest into the end of the year.

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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.