Hogs
Price action: December lean hogs fell $1.625 to $78.975, near the daily low and hit a nearly four-month low.
Fundamental analysis: The December lean hog futures contract today saw a bearish “outside day” down on the daily bar chart, which suggests more selling pressure on Friday. The cash hog market remains in a downtrend, which is also prompting the speculative traders to play the short side in hog futures. A “risk-off” day in the general marketplace today and lower cattle futures prices today kept the hog futures bulls on the sidelines.
The latest CME lean hog index is down another 4 cents at $90.86. Friday’s projected cash hog index is down 26 cents at $90.60. Today’s national direct 5-day rolling average cash hog price quote is $84.69. The noon report today showed pork cutout value down 20 cents to $97.34, led by losses in ribs. Movement at midday was 141.76 loads.
Technical analysis: December lean hog futures bears have the solid overall near-term technical advantage. Prices are in a steep five-week-old downtrend on the daily bar chart. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at $83.00. The next downside price objective for the bears is closing prices below solid technical support at the July low of $77.725. First resistance is seen at this week’s high of $81.725 and then at $83.00. First support is seen at today’s low of $79.15 and then at $77.725.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You should have all your soymeal needs covered through December in the cash market. For corn, you now have all needs through November covered in the cash market.
Cattle
Price action: December live cattle fell $1.75 to $218.775, near the daily low and hit a 3.5-month low. January feeder cattle lost $4.375 to $315.60, near mid-range and hit a three-month low.
Fundamental analysis: The live and feeder cattle futures markets today saw follow-through selling pressure after closing locked-limit-down Wednesday. A keen risk-off day in the general market place that saw a sharp sell off in the stock indexes and all commodity futures markets in the red today, except sugar, also kept the cattle futures buyers on the sidelines. Price action this week has seen bearish downside “breakouts” from pennant patterns that formed on the daily bar charts for live and feeder cattle futures. Measuring implications from these bearish chart patterns suggest still more downside price potential in both markets in the near term.
USDA today reported active cash cattle trading activity at an average of $228.97. Last week’s USDA average cash cattle trade was $230.86 versus the week prior’s average of $237.89. The noon report today showed wholesale boxed beef cutout values mixed, with Choice-grade down 29 cents to $377.97, while Select rose $1.76 to $362.01. Movement at midday was 60 loads. The Choice-Select spread is presently $15.96.
Technical analysis: The live and feeder cattle futures bears have the solid overall near-term technical advantage. Prices are still in downtrends on the daily bar charts. The next upside price objective for the live cattle bulls is to close December futures above resistance at $230.00. The next downside technical objective for the bears is closing prices below solid technical support at $210.00. First resistance is seen at today’s high of $222.825 and then at $225.00. First support is seen at today’s low of $218.075 and then at $216.00.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $330.00. The next downside price objective for the bears is to close prices below solid technical support at $300.00. First resistance is seen at today’s high of $321.575 and then at $325.00. First support is seen at today’s low of $311.40 and then at $310.00.
What to do: Cover your corn-for-feed needs in the cash market through November.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you have full coverage in cash through December. For corn, you have all needs through November covered in the cash market. Be prepared to make additional purchases if value prices continue.