Livestock Analysis | April 23, 2024
Price action: June lean hogs rose $2.45 at $107.95 and nearer the session high.
Fundamental analysis: The lean hog futures market bulls are right back in business after three straight days of good gains that puts prices within easy striking distance of the early-April contract high. The recent rebounds in the cattle futures markets have also supported buying interest in hog futures.
The noon report today showed pork cutout value down $3.39 at $98.31, led by a drop of $29.48 in bellies. Movement at midday was 133.48 loads. The latest CME lean hog index is down 4 cents to $91.31 as of April 19. Wednesday’s projected cash index price is up 14 cents at $91.45. The national direct five-day rolling average cash hog price quote today is $89.60.
Wednesday’s USDA cold storage report will provide insight into how well the start to the grilling season has been. The past few months have shown pork stocks below the five-year averages.
Technical analysis: The lean hog futures bulls have the solid overall near-term technical advantage and gained more strength today. Prices are in a 3.5-month-old uptrend on the daily bar chart. The next upside price objective for the hog bulls is to close June prices above solid chart resistance at the contract high of $109.65. The next downside price objective for the bears is closing prices below solid technical support at the April low of $101.075. First resistance is seen at $109.65 and then at $110.00. First support is seen at today’s low of $105.55 and then at this week’s low of $104.40.
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: June live cattle futures fell 90 cents to $177.15, though settled nearer session highs. May feeder cattle futures rallied 87.5 cents to $246.05.
Fundamental analysis: Live cattle futures closed the gap from Monday’s higher open, though closed well off session lows. Cattle futures have been largely tied to the cash market, as April futures are nearing expiration, traders are likely cautious of premiums held in futures. Despite the rally in futures last week, cash cattle prices continued lower. Traders are likely looking for confirmation in the cash market before adding premium back into futures prices. Packers’ reluctance to pay up for cash cattle continues to weigh heavily on the market, as packer margins remain in the red despite the recent downtick in cattle prices, as wholesale beef prices have faced similar selling pressure. A recent report from Hedgersedge pegged packer margins at -$66.30/head, which is down from -$47.35 last week. Showlist numbers are expected to increase this week, especially in the Southern Plains. That could limit any strength in the cash cattle market as well, as packers have actively cut hours at plants to deal with poor margins. Wholesale beef prices surged at midsession, as Choice cutout jumped $3.69 to $299.62 and Select rose 74 cents to $292.61. Movement was decent this morning at 71 loads.
Gains in the feeder cattle index, which was most recently quoted $1.11 higher to $243.22, underpinned feeder futures today despite the ongoing rally in the corn market. Feeders continued higher despite the selling pressure seen in the fats.
Technical analysis: June live cattle futures closed modestly lower today and closed well off intraday lows. Bulls have the slight overall near-term technical advantage. Initial resistance stands at the 40-day moving average, currently at $177.85, which is quickly backed by Monday’s high at $178.80 with further backing from $180.25. Bulls are seeking to hold support at $176.50, the 20-day moving average, which is backed by today’s low of $175.125, then the psychological $175.00 mark.
May feeder cattle futures continue to boast strong gains despite relative weakness in the fats. Bulls maintain the slight overall near-term technical advantage. Initial resistance stands at the 40-day moving average at $246.30, which is backed by $247.50, with significant resistance lying at $249.55. Meanwhile, support comes in at the psychological $245.00 mark, the 20-day moving average at $243.60, then $242.35.
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.
