Livestock Analysis | March 19, 2024
Price action: April lean hogs fell $1.00 to $85.825 and near mid-range.
Fundamental analysis: The hog futures market today saw some profit-taking and chart-based selling pressure. The recent solid rally in the U.S. dollar index is also a bearish “outside market” element for the hog market.
Cash market fundamentals remain friendly, however. The latest CME lean hog index is up 20 cents to $82.54 as of March 15. Wednesday’s cash index projection is up another 28 cents at $82.82. April futures are trading at a $3.005 premium to the cash index at present. The national direct five-day rolling average cash hog price quote today was $79.65.
The noon report today showed pork cutout value rose 73 cents to $93.89, led by a $7 gain in ribs. Movement at midday was decent at 146.95 loads.
Technical analysis: The lean hog futures bulls have the overall near-term technical advantage. Bulls are working to restart a two-month-old uptrend on the daily bar chart. 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 today’s high of $86.70 and then at last week’s high of $87.525. First support is seen at $85.00 and then at $84.00.
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 should have all corn-for-feed and soymeal needs covered in the cash market another month through April.
Price action: April live cattle futures fell 52.5 cents before settling at $188.05. April feeder cattle futures slipped 2.5 cents to $255.075, while expiring March feeders dropped 52.5 cents to $250.675.
Fundamental analysis: Cattle futures ended the day mixed in choppy trade ahead of USDA’s Cattle on Feed Reports. Cash cattle trade is virtually nonexistent thus far this week, per usual in week’s capped with USDA reports. Still, last week’s surge to near-record levels in the cash market is likely to limit losses in the futures market this week. Cash sources expect cash cattle prices to remain steady/firmer once again this week, a test of the record high at $188.75 made the week ended June 9, 2023, is likely to be tested in the near future. Wholesale beef prices continue to work higher, further improving packer margins. Choice cutout was quoted $1.56 higher at midsession while Select lost 6 cents to $302.99. Movement improved to 75 loads this morning.
Outside markets did little to sway live cattle futures today, as the equity market started the morning lower and rallied throughout the session. The U.S. dollar posted gains today as well, a change of pace from recent weakness. The recent rally in bond yield has supported the dollar, as it is trading at the highest mark in two weeks. A surging corn market did little to dissuade feeder cattle bulls, as reports of 7 weights trading north of $300 in the northern market circulated kept the downside largely intact. Still, feeder cattle struggle breaking to the upside as the feeder cattle index continues to lag behind futures, though most recent quote, up $1.86 to $250.86, marks the highest quote since last October and could be the boost futures need to work higher.
Technical analysis: April live cattle futures posted modest losses, trading within Monday’s range. Bulls continue to hold the near-term technical advantage. Resistance at $188.75 capped gains the last two sessions and has capped most of the upside since mid-February. Additional buying targets last week’s for-the-move high at $190.275, with psychological resistance at $190.00 on the way. Meanwhile, support comes in at $187.90, the 10-day moving average, which limited losses today. Further selling eyes support at $187.20.
April feeder cattle futures traded on both sides of unchanged before closing slightly lower on the day. Bulls are seeking to close prices above $255.25, which would be above the downtrend line that has capped gains since the Feb. 26 peak. Further resistance stands at $258.00, then the for-the-move high of $260.80. Support stands at $254.00, the 20-day moving average, $252.20, then last week’s low of $251.175.
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.
