Livestock Analysis | January 23, 2024
Price action: April lean hog futures rose $2.70 at $80.325, near the session high and hit a two-month high.
Fundamental analysis: Technical buying from the speculators was featured today as the near-term chart posture for April hogs has quickly turned bullish. Up-trending cattle futures prices are also friendly for the hog futures market.
Improving cash and wholesale pork fundamentals are also helping to push futures prices up. The CME lean hog index was up 34 cents to $68.40 as of Jan. 19, the ninth increase in the last 10 days. Wednesday’s preliminary figure for the cash hog index (Jan. 22) is $68.75, up another 35 cents. The noon report today showed pork cutout value down 42 cents to $89.75, led by losses in butts and bellies. Still, recently rising wholesale pork prices have strengthened packer margins, giving packers incentive to keep raising cash hog bids. Pork movement at midday was decent at 164.81 loads. The national direct five-day rolling average cash hog price today was quoted at $46.63.
Technical analysis: The lean hog futures bulls have gained the overall near-term technical advantage. April futures prices are now trending up on the daily bar chart. Prices today saw an upside “breakout” from a bull flag pattern on the daily bar chart. The next upside price objective for the hog bulls is to close April prices above solid chart resistance at the November high of $82.80. The next downside price objective for the bears is closing prices below solid technical support at $76.00. First resistance is seen at $81.00 and then at $82.00. First support is seen at $79.00 and then at $78.00.
What to do: Get current with feed advice. Carry all production risk in the cash market for now.
Hedgers: Carry all risk in the cash market for now.
Feed needs: You have all corn-for-feed and soymeal needs covered in the cash market through January.
Price action: February live cattle futures surged 87.5 cents to $174.65. March feeder cattle futures rallied $2.375 to $233.65, a two-month high close, while expiring January futures rose $1.175 to $231.00.
Fundamental analysis: Cattle futures continue to march higher on the daily bar chart in a persistent rally. Cash cattle trade has been minimal so far this week as negotiations will likely be pushed into the latter half of the week once again. Cash cattle prices have been relatively steady for three-consecutive weeks despite wholesale beef prices surging over the same period. After several weeks of margins in the red, surging wholesale beef prices have led to packer margins being estimated at a modest profit, according to Hedgersedge. While negotiations have been slim the past couple of weeks, dressed weights have stayed high, which has helped keep supplies higher despite depressed slaughter counts due to holidays and wintry weather.
Wholesale beef prices once again surged at midsession, as Choice cutout rose $2.34, crossing the psychological $300.00 mark at $301.01. Select rose $2.87 to $289.45, further narrowing the Choice/Select spread to $11.56. Movement stayed relatively light at 56 loads, showing retailers are being selective with purchases.
Technical analysis: February live cattle futures continue to trade in a tight uptrend on the daily bar chart, grinding higher. Bulls continue to hold the near-term technical advantage. Resistance stands at $174.75, which capped most of the gains last week, with further backing from the psychological $175.00 mark, then $176.75. Meanwhile, support stands at $173.60 then the 10-day moving average at $173.10. Further selling targets the 20-day moving average at $172.10.
March feeder cattle futures surged to a two-month high today. Prices are grinding higher on the daily bar chart following sideways trade that lasted from mid-December to mid-January. Bulls are seeking to close prices above the 100-day moving average at $233.75, which capped gains today. Further resistance lies at $234.525 then the psychological $235.00 mark. Support stands at $231.275, the 10-day moving average at $230.00, then $228.75.
What to do: Get current with feed advice. All production risk in the cash market for now but be prepared for some hedge coverage as we have demand concerns.
Hedgers: Carry all risk in the cash market for now.
Feed needs: You have all corn-for-feed and soymeal needs covered in the cash market through January.
