Livestock Analysis | March 18, 2024
Price action: April lean hog futures fell 10 cents to $86.825, settling directly in the mid-point of today’s $1.00 range.
Fundamental analysis: Lean hog futures traded on both sides of unchanged, though saw limited volatility throughout the session. Deferred futures showed relative strength as the cash market is likely to be supported by the early start to the grilling season and the expected tightening of hog supplies. The CME lean hog index is up 15 cents to $82.34 today (as of Mar. 14) and the preliminary calculation puts the index up another 20 cents to $82.54 tomorrow, further extending the seasonal rally. April futures continue to trade at a historically average premium to the index, though futures will be heavily reliant on continued strength in the index, evidenced as recently as last week when cash market weakness quickly undercut futures prices. For extended upside in futures, gains in the index will need to accelerate, though the downside is likely to be largely capped in the meantime.
Wholesale pork prices showed impressive strength at midsession, rising $1.76 to $95.23. That would mark the highest quote since early October 2023 if gains are sustained in afternoon trade. All cuts except ribs posted gains this morning.
Technical analysis: April lean hog futures traded in a tight range before closing modestly lower. Bulls continue to hold the technical advantage, though premiums to the CME lean hog index are likely to continue to limit gains in nearby futures. Bulls are seeking to close prices above resistance at $86.925 before tackling staunch resistance at $88.075. Further selling targets support at $85.90, the 10-day moving average at $85.60, then the psychological $85.00 mark.
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 should have all corn-for-feed and soymeal needs covered in the cash market another month through April.
Price action: April live cattle rose $1.325 to $188.575. May feeder cattle gained $3.125 at $259.125. Prices closed near their session highs.
Fundamental analysis: The cattle futures markets today saw solid price rebounds from the selling pressure seen late last week, to keep the bulls in firm technical control. Cash cattle market fundamentals remain solid. Cash cattle prices are challenging the record high from mid-2023. Last week’s cash cattle trading averaged $187.47, up $2.45, which is the second-highest average trade ever. Today’s noon report showed boxed beef cutout value rose again, with Choice-grade up $1.43 to $313.33, while Select grade increased $1.40 to $303.80. Movement at midday was light at 43 loads. The Choice/Select spread is presently at $9.53.
Traders are awaiting Friday afternoon’s monthly USDA Cattle-on-Feed Report, which likely means late-week cash cattle negotiations and trade will occur, possibly as late as Friday afternoon.
Technical analysis: The live and feeder cattle futures bulls have the overall near-term technical advantage. Live cattle futures bulls see a 3.5-month-old price uptrend is in place on the daily bar chart. The next upside price objective for the bulls is to close April live cattle futures above solid resistance at the March high of $190.275. The next downside technical objective for the bears is closing prices below solid technical support at $184.475. First resistance is seen at $190.275 and then at $192.00. First support is seen at last week’s low of $186.65 and then at $185.000.
Feeder cattle futures see a three-month-old uptrend on the daily bar chart that has stalled out. The next upside price objective for the feeder bulls is to close May futures prices above technical resistance at the February high of $263.125. The next downside price objective for the bears is to close prices below solid technical support at $250.675. First resistance is seen at $260.00 and then at $261.50. First support is seen at today’s low of $256.50 and then at $255.00.
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 should have all corn-for-feed and soymeal needs covered in the cash market another month through April.
