Pro Farmer's Livestock Analysis March 31, 2022
Price action: Hog futures posted sharp losses and ended low-range. April hogs dropped $2.775 to $101.75. June hogs plunged $3.60 to $120.625.
Fundamental analysis: Hog futures opened sharply higher this morning in reaction to Wednesday’s bullish Hogs & Pigs Report. But the strong start failed to trigger additional buying and sellers quickly surfaced. It’s never a good sign when a market fails to capitalize on bullish news. Today’s sharp losses and low-range closes add to the short-term concerns for bulls.
While the report was bullish, money flow trumped the data and was bearish. Outside markets were price-negative today, with the commodity sector under heavy pressure, the stock market lower and the U.S. dollar index sharply higher. If today’s sharp fund-led selloff is significantly extended Friday, it could signal a market top and deeper corrective pullback.
With today’s sharp losses, April hogs are now trading below the cash index with just two weeks until expiration. The CME lean hog index for Friday (as of March 30) is projected to fall 53 cents to $103.13. April hogs finished $1.38 below that level.
Technical analysis: June lean hog futures posted a key bearish reversal after gapping to a contract high and closing below Wednesday’s low. There’s a gap from March 23 at $120.225 that bulls will likely try to fill. A gap below that level would leave a non-traditional island top on the daily chart. Next support would be the March 18 low at $115.55. Today’s contract high at $127.325 is stiff near-term resistance.
What to do: You are hand-to-mouth on corn-for-feed and soybean meal needs. Wait on an overdue corrective pullback to extend coverage.
Hedgers: Carry all risk in the cash market for now.
Feed needs: You remain hand-to-mouth on soybean meal and corn-for-feed needs.
Price action: June live cattle closed down 87 1/2 cents at $137.125 and nearer the session low. April cattle lost 80 cents at $139.375. May feeder cattle closed down $2.35 at $166.55 and nearer the session low.
Fundamental analysis: Some profit-taking from the shorter-term speculators in the futures markets pressured live and feeder cattle today, following recent gains. Feeder cattle were also pressured by gains in the corn futures today, as well as the feeder cattle futures premium to the cash index.
Cash cattle trade occurred Wednesday in the Southern Plains at $138, which is steady with last week’s trade in that region. However, most feedlots passed on those prices in hopes of higher bids. Cash trade as of this writing had not begun in the northern dressed beef market. Most feedlots were looking for at least $1 higher bids.
Boxed beef prices at noon today saw Choice grade up another $2.02 at $269.06 and Select grade a solid $4.61 higher, though movement stayed light at only 43 loads at midday, further suggesting retailers remain selective buyers of beef.
USDA today reported weekly U.S. beef export sales at 23,000 MT -- down 17% from the previous week and 7% from the four-week average. China (7,100 MT), Japan (5,300 MT) and South Korea (4,600 MT) were the primary buyers.
Technical analysis: Live cattle futures bulls still have the overall near-term technical advantage. A four-week-old price uptrend is in place on the daily bar chart. Live cattle bulls' next upside price objective is to close June futures prices above solid resistance at $141.00. The next downside technical objective for the bears is closing prices below solid technical support at last week’s low of $134.075. First resistance is seen at this week’s high of $138.40 and then at $139.00. First support is seen at Tuesday’s low of $136.675 and then at this week’s low of $135.90.
Feeder cattle futures bulls still have the slight overall near-term technical advantage. A four-week-old price uptrend is also in place on the daily bar chart. The next upside price objective for the feeder bulls is to close May futures prices above technical resistance at $172.50. The next downside price objective for the bears is to close prices below solid technical support at $163.075. First resistance is seen at today’s high of $168.80 and then at this week’s high of $170.40. First support is seen at today’s low of $165.625 and then at this week’s low of $164.70.
What to do: You are hand-to-mouth on corn-for-feed and soybean meal needs. Wait on an overdue corrective pullback to extend coverage.
Hedgers: Carry all risk in the cash market for now.
Feed needs: You remain hand-to-mouth on soybean meal and corn-for-feed needs.
