Livestock Analysis | March 12, 2024

Livestock Analysis
Livestock Analysis
(Pro Farmer)

Hogs

Price action: April lean hogs closed up $2.075 at $85.35 and near the session high.

Fundamental analysis: The lean hog futures bulls needed to show fresh power and they did just that today. Cash hog and pork market fundamentals are still sound. The latest CME lean hog index is down 7 cents to $81.41 as of March 8, the first daily decline since Feb. 8. However, tomorrow’s projected cash price quote is up 20 cents to $81.61, which would be a new high for the latest up-move in the index. The national direct five-day rolling average cash hog price quote today was $76.51. The noon report today showed pork cutout value rose another $1.06 to $94.57 amid gains loins and bellies. Movement at midday was decent at 146.85 loads.

While there are some bearish short-term ideas of a late-March decline in ham values when retailers complete their wholesale ham purchases for Easter, the smaller ham stocks suggest any expected dip may not prove long-lasting. Strong consumer for pork demand during the spring grilling season should continue to support higher pork price levels in the coming weeks.

Technical analysis: The lean hog futures bulls have the overall near-term technical advantage. A two-month-old uptrend on the daily bar chart has stalled out. However, today’s gains suggest the uptrend could be restarted this week. The next upside price objective for the hog bulls is to close April prices above solid chart resistance at the February high of $88.90. The next downside price objective for the bears is closing prices below solid technical support at $80.00. First resistance is seen at $87.00 and then at $88.00. First support is seen at this week’s low of $83.25 and then at $82.00.

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 soymeal needs covered in the cash market through March.

 

 

Cattle

Price action: April live cattle futures rallied 65 cents to $188.25, settling near the mid-point of today’s session. April feeder cattle futures firmed $1.025 to $254.125, while nearby March futures rallied 72.5 cents to $248.975.

Fundamental analysis: Live cattle were supported by technical buying as April futures bounced off technical support, maintaining the uptrend on the daily bar chart. Still, the prevailing tendency over the past couple of weeks has been sideways trade, as traders await gains in the cash market to catch up to futures prices, narrowing premiums that the April contract holds to negotiated cash trade. No cash trade has taken place yet this week, packers purchased an impressive 76,000 head of cattle in the negotiated market last week, which could limit packers’ willingness to return to the negotiating table soon, though cash sources expect higher cash trade once again this week. Continued strength in the wholesale beef market supports that belief, as rising cutout values continue to chip away at negative packer margins. Choice cutout jumped $3.63 to $312.51 and Select firmed 90 cents to $299.78. Sustained strength this afternoon is likely to continue to lend strength to the futures market, helping sustain the uptrend stemming back to December lows. The midsession quote for Choice is the highest since early September 2023 and a record high for this time of year.

Feeders have shown relative weakness as of late as sustained strength in the corn market has limited buying interest. The feeder cattle index forged a new high late last week. Deferred futures contracts continue to imply sustained strength in the index to record highs later this year.

Technical analysis: April live cattle futures pressed into the upper end of the recent sideways range. Bulls continue to hold full control of the technical advantage. Resistance stands at Thursday’s for-the-move high close of $188.725, which stalled buying efforts today. Further resistance stands at $189.95, quickly backed by the psychological $190.00 mark. Meanwhile, bulls are seeking to hold uptrend line support at $188.00, which is backed by the 10-day moving average at $187.575, then the 20-day moving average at $186.65.

April feeder cattle futures posted modest gains on the session. The recent uptrend has stalled after consolidating for the last three weeks. The 20-day moving average capped gains today, remaining resistance at $254.025. Further resistance stands at $255.00, $255.75, with significant backing from $258.00. Meanwhile, support stands at $253.10, $251.975, then the 40-day moving average at $250.055.

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 soymeal needs covered in the cash market through March.  

 

 

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