Hogs
Price action: February lean hog futures fell 47 1/2 cents to $85.675, near mid-range.
Fundamental analysis: Lean hog futures today saw some mild profit taking after prices Monday hit a 2.5-month high. Bulls are still solid, however. The February lean hog futures contract is well above the latest CME lean hog index, which is bullish for futures and suggests futures traders expect the cash hog market to rally in the coming weeks. However, cash hog prices have begun to slip a bit lately.
The latest CME lean hog index is down 23 cents to $81.62. Wednesday’s projected cash index price is down 8 cents at $81.54. Today’s national direct 5-day rolling average cash hog price quote is $69.40. The noon report today showed pork cutout value down $1.49 at $92.35, led by losses in picnics and bellies. Movement at midday was good at 246.35 loads.
Technical analysis: February lean hog futures bulls have the firm overall near-term technical advantage. Prices are trending up on the daily chart. The next upside price objective for the hog bulls is to close February futures prices above solid chart resistance at $89.00. The next downside price objective for the bears is closing prices below solid technical support at $82.40. First resistance is seen at this week’s high of $86.45 and then at $87.50. First support is seen at today’s low of $84.925 and then at this week’s low of $84.275.
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 February in the cash market. You should also have corn-for-feed needs purchased through February. Be prepared to make additional purchases.
Cattle
Price action: February live cattle rose 75 cents to $236.625, near mid-range and closed at hit a 10-week high close. March feeder cattle gained $3.20 to $362.175, near the session high and hit a 10-week high.
Fundamental analysis: The cattle futures markets today saw feeders take the lead amid the New World Screwworm situation in Mexico that continues to keep Mexican cattle out of the U.S.
Continued technical buying interest from the speculators is also supporting the cattle futures markets. The near-term chart postures for both live and feeder cattle futures remain firmly bullish. Higher cash cattle prices last week also supported futures prices today.
USDA today reported very light cash cattle trading taking place this week at $232.00.
USDA reported last week’s average cash cattle trade at $231.68—up $2.35 from the week prior. The noon report today showed wholesale boxed beef cutout values weaker, with Choice-grade down 51 cents at $353.10, while Select-grade was down 69 cents to $350.81. Movement at midday was decent at 90 loads. The Choice-Select spread has narrowed to $2.38.
Technical analysis: The live and feeder cattle futures bulls have the firm overall near-term technical advantage. Price uptrends are in place on the daily bar charts. The next upside price objective for the live cattle bulls is to close February futures above resistance at $240.375, which is the top of a downside price gap on the daily bar chart. The next downside technical objective for the bears is closing prices below solid technical support at $226.85. First resistance is seen at this week’s high of $237.45 and then at $239.00. First support is seen at this week’s low of $234.925 and then at $233.00.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at $370.00. The next downside price objective for the bears is to close prices below solid technical support at $343.00. First resistance is seen at today’s high of $359.40 and then at $361.00. First support is seen at this week’s low of $353.125 and then at $350.00.
What to do: Cover corn-for-feed needs through February in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you have full coverage in cash through February. You have corn-for-feed needs covered through February as well. Be prepared to make additional purchases if value prices continue.