Livestock Analysis | March 14, 2022
Price action: April lean hogs fell 52.5 cents to $102.20. June hogs rose $1.175 to $119.35.
Fundamental analysis: Sharp gains in cattle futures markets spilled over into deferred hog futures, such as June, and limited selling pressure on nearby April. The charts suggest cattle futures have put in near-term bottom and have more room on the upside, which may support fresh buying in hog futures.
Seasonally higher consumer demand for pork is a just few weeks away, with retailers poised to step up purchases as the U.S. grilling season nears. High retail beef prices at the meat counter may prompt many consumers to favor cheaper pork cuts. Also, hog slaughter levels typically decline to annual lows by early summer, so supplies will tighten.
Technical analysis: Lean hog bulls have the slight near-term technical advantage. The next upside price objective for bulls is closing April futures above solid resistance at $105.05, which is the top of a downside price gap on the daily bar chart. The next downside objective for bears is closing April below solid support at $97.50. First resistance is seen at $103.575, then $104.25. First support is seen at $101.00, then $100.00.
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: Live cattle and feeder cattle futures started the week by posting strong gains. April live cattle firmed $3.025 to $140.325, the highest closing price since March 1. April feeders jumped $4.425 to $162.40.
Fundamental analysis: Feeder cattle were supported by weaker corn futures. Additional support came from firmer cash prices at the Oklahoma City cash feeder cattle auction. USDA reported cash steers traded mostly $2 to $4 higher, with feeder heifers $3 to $6 higher.
Buyer interest was limited in live cattle initially this morning, but the strength in feeders fueled a wave of buying as the market built on last Friday’s gains. Traders haven’t formed strong cash cattle opinions for the week but followthrough buying would strengthen cash expectations. Last week, cash cattle averaged $138.30, down $2.31 from the previous week and nearly $5 lower than two weeks ago.
Wholesale beef trade got off to a sluggish start this morning. Choice boxes firmed 33 cents, while Select was 4 cents lower and packers moved only 42 loads. Movement slowed last week when Choice prices firmed, suggesting retailers remain selective buyers.
Technical analysis: April live cattle strengthened the case that a short-term bottom was established March 4. Bulls next upside target is the 20-day moving average around $141.60, followed by the 100-day average around $141.83 and 40- and 50-day averages in the $142.74 to $142.88 range. The January low at $139.025 is support again.
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.
