Livestock Analysis | March 27, 2024
Price action: Nearby April hog futures led the summer contracts higher Wednesday. It climbed 52.5 cents to $86.10, while most-active June rose 25 cents to $101.60.
Fundamental analysis: The cash hog and wholesale pork markets continue exhibiting considerable strength. For example, after dipping slightly last Friday, the cash hog index accelerated upward again early this week. The CME confirmed Monday’s preliminary quote at $83.69, up 21 cents, this morning, with today’s pertinent USDA report indicating the index is likely to add another 56 cents to $84.25 when it’s officially released tomorrow. Pork cutout did slip another 60 cents to $94.73 at midsession today, but that would still represent the third highest quote of the year, behind only the levels reached Monday and Tuesday. History suggests there’s a decided tendency for early-April hog and pork price weakness, but we are strongly inclined to blame that weakness on conditions around Easter in most years. Given that the holiday arrives this Sunday, we doubt the hog and pork complex will suffer much from the holiday this year. Indeed, one could argue that some packing industry cutbacks on Easter Monday will further tighten short-term supplies and provide additional support.
Of course, tomorrow afternoon’s (2:00 pm, 3/28) quarterly USDA Hogs & Pigs report could also exert major influence over next week’s trading, since it will provide the best estimate of hog supplies over the coming months. Of key interest is whether the slaughter reductions seen during the first two weeks March signaled a comparative reduction in forthcoming hog supplies, especially after slaughter has routinely topped year-prior levels since early 2023.
Technical analysis: Bulls still own the short-term technical advantage in June hog futures, although bears continue vigorously defending resistance at recent highs. Today’s top marked fresh resistance at the $102.425; it’s backed by yesterday’s high at $102.725, then by last Monday’s (3/18) contract high at $103.475. Conversely, bears had no luck in penetrating stout support between the contract’s 20- and 10-day moving averages near $101.35 and $101.25, respectively. A breakdown below that range would open the door to a retest of the psychological $100.00 level, but it would also leave bears still facing strong support at the contract’s 40-day moving average near $99.28.
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: June live cattle rose 30 cents to $178.675 and near the session high. May feeder cattle closed up $1.025 at $248.275 and near the session high.
Fundamental analysis: Live cattle and feeder cattle futures markets posted corrective rebounds today following strong selling pressure on Monday and Tuesday. Steep discounts to cash cattle prices limited selling interest in futures today. Cash cattle trade has been scarce so far this week. There were 454 head traded Monday in Kansas. That’s positive for the short-term outlook since the price drop was only $1.75 below last week’s average for the state and above the $185.79 average posted the week prior. Today’s USDA report showed just 98 head had traded in Texas-Oklahoma Tuesday, at $183.00. Active selling in live cattle futures this week suggests cash cattle trading prices could drop from last week’s record average high of $189.56.
The noon report today showed Choice-grade boxed beef cutout value down $1.22 to $309.87, while Select grade fell $1.05 to $299.21. Movement at midday was good at 93 loads. The Choice-Select spread is presently $10.66.
Technical analysis: The live cattle futures bears have the slight overall near-term technical advantage. A 3.5-month-old price uptrend on the daily bar chart has been negated. The next upside price objective for the bulls is to close June futures above solid resistance at $182.50. The next downside technical objective for the bears is closing prices below solid technical support at $170.00. First resistance is seen at today’s high of $179.325 and then at $180.00. First support is seen at today’s low of $177.175 and then at this week’s low of $176.40.
The feeder cattle futures bulls and bears are on a level overall near-term technical playing field. A three-month-old uptrend on the daily bar chart has been negated. The next upside price objective for the feeder bulls is to close May futures prices above technical resistance at $255.00. The next downside price objective for the bears is to close prices below solid technical support at $240.00. First resistance is seen at $250.00 and then at $251.00. First support is seen at $247.00 and then at this week’s low of $245.425.
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.
