Livestock Analysis | March 21, 2022

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Hogs

Price action: June lean hogs rose $3.75 to $119.825 and nearer the daily high. Nearby April hogs gained $1.225 to $100.625.

Fundamental analysis: Bullish sentiment in the hog market showed renewed power after prices slumped late last week. Today’s strong gains and a more bullish technical posture suggest more upside price potential in the near term. High retail beef prices and the upcoming grilling season also inspired the hog market bulls today. April futures’ discount to the CME lean hog index (presently 73.5 cents) is also encouraging buyers in lean hog futures.

Pork cutout values early today fell $1.72 to $103.23, led by declines in bellies. Movement was decent at 185.90 loads. The five-day rolling average national direct cash hog price today was quoted at $102.38. The latest CME lean hog index price is $101.36, up 59 cents and at the highest level since Aug. 31. Today’s hog slaughter was estimated at 119,000 compared to 125,000 last Monday and 116,000 one year ago. Tighter hog supplies this summer should continue to provide support for cash and futures.

Technical analysis: Market bulls have a solid near-term technical advantage and gained fresh power today. The next upside price objective for bulls is closing June futures above solid resistance at $125.00. The next downside objective for bears is closing prices below solid support at the March low of $109.15. First resistance is seen at today’s high of $120.825, then at the contract high of $122.00. First support is seen at $118.00, then at today’s low of $116.325.

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.

 

Cattle

Price action: Live cattle futures finished mostly lower following two-sided trading. April live cattle dropped 45 cents to $140.05, while June live cattle fell 72.5 cents to $136.35. May feeder futures fell $1.70 to $165.75.

Fundamental analysis: Feeder cattle futures were pressured by the strength in the corn market, which kept the market under pressure the entire day. Steady to firmer prices at the Oklahoma City feeder cattle auction helped pull some contracts off their lows into the close.

Price action was relatively quiet and undecided for much of the day in live cattle, though the weakness in feeder cattle weighed on the market late. Cash cattle trade averaged $139.10 last week, up 80 cents from the previous week, and traders generally have bullish hopes for this week’s cash market. That should help limit seller interest as traders wait on active cash trade to develop.

Morning boxed beef trade showed strong price gains, with Choice up $1.26 and Select $1.94 higher, though movement was light at just 42 loads. Packers continue to struggle to find active retailer demand on days when they push prices higher, likely reflecting consumer demand concerns amid high retail prices.

Technical analysis: Technically, April live cattle likely put in a short-term bottom at the March 4 spike low. But the contract must push above last week’s high at $141.475 to trigger a fresh wave of buying that pushes the contract closer to the contract high at $148.70. There’s a lot of room between this month’s low and the contract high posted in February for the contract to chop around.

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.

 

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