Livestock Analysis | February 8, 2024

Livestock Analysis
Livestock Analysis
(Pro Farmer)

Hogs

Price action: A dip in hog and pork prices triggered another drop in hog futures Thursday, with expiring February futures sliding 7.5 cents to $73.30 and most-active April tumbling 75 cents to $80.35.

Fundamental analysis: Pork cutout values fell rather sharply (down $2.24 to $83.99) Wednesday, which probably played a role in today’s weak performance by lean hog futures. A dip in the lean hog index in the wake of recent gains may also have spurred selling. The official index quote for Tuesday confirmed the preliminary figure of $74.02, up 16 cents from Monday, and today’s calculation for Wednesday represented a two-cent slip to $74.00. In fact, the February contract is now projecting continued slippage through next Wednesday’s (Feb. 14) contract expiration.

However, pork prices rebounded at midsession, with cutout being stated $1.57 higher at $85.56 despite a $5.91 drop in primal pork belly values. Most cuts rose today, with the $4.82 advance in ham prices seemingly marking processor/grocer buying for planned Easter features. We continue thinking sustained ham strength will offer the hog and pork complex considerable support in the coming weeks. This could prove particularly true if hog slaughter falls sharply after the industry got caught up from holiday- and weather-related slowdowns over the past two weeks.

Technical analysis: Bulls may still hold a slight advantage concerning the short-term technical situation in April futures, especially after bears proved unable to sustain today’s dip below the psychologically important $80.00 level. Initial support at that point is backed by today’s low of $79.675, but a drop below that point would have bears targeting the pivotal 40-day moving average near $78.68. Conversely, today’s drop below the 20-day moving average near $81.06 made that point significant initial resistance. That’s backed by Tuesday’s high at $82.15, then the 10-day moving average near $82.88.

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 soybean meal needs covered in the cash market through February.

 

 

Cattle

Price action: April live cattle rose $1.775 at $186.575 and nearer the session high. Prices hit a three-month high today. March feeder cattle closed up $1.30 at $246.85 and nearer the session low. Prices hit a 3.5-month high early on.

Fundamental analysis: The cattle futures markets were supported today by more chart-based buying from speculative traders. A booming U.S. stock market that has seen the major indexes hit new record highs this week is boosting consumer confidence and also prompting better consumer demand for beef at the meat counter. Supplies of market-ready cattle also remain tight.

Cash cattle trade has been slow to develop late this week. It appears feedlots are holding out for higher moneys, spurred by this week’s gains in futures markets. Packers have been reluctant to raise bids as their margins have moved into the red after cash cattle prices gained the past three weeks. The noon report showed Choice-grade boxed-beef cutout value fell 88 cents to $294.10, while Select grade gained 48 cents to $285.90. Movement at midday was 68 loads. The Choice-Select spread is presently $8.20.

USDA this morning reported U.S. beef export sales of 20,600 MT for 2024.

Technical analysis: The live and feeder cattle futures bulls have the firm overall near-term technical advantage. Two-month-old price uptrends are in place on the daily bar charts. The next upside price objective for the live cattle bulls is to close April futures above solid resistance at $190.00. The next downside technical objective for the bears is closing prices below solid technical support at $180.00. First resistance is seen at today’s high of $187.475 and then at $189.00. First support is seen at today’s low of $185.15 and then at $184.00.  The next upside price objective for the feeder bulls is to close March 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 today’s high of $249.15 and then at $250.00. First support is seen at $245.00 and then at $244.00.

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 have all corn-for-feed and soybean meal needs covered in the cash market through February.

 

 

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