Hogs
Price action: April lean hog futures rose 30 cents to $98.45, nearer the session low and hit a contract high early on.
Fundamental analysis: Lean hog futures today saw some profit-taking pressure after hitting a new contract high. Today’s low-range daily close does hint the hog market bulls may now be exhausted after this week’s good gains. April futures’ big premium to the cash market suggests futures traders believe there is more upside for the cash hog market in the coming weeks. The latest CME lean hog index is up 12 cents at $85.83. Thursday’s projected cash index price is up 23 cents at $86.06. The national direct five-day rolling average cash hog price quote today is $62.81. The noon report today showed pork cutout value down $3.84 at $93.53, led by a big loss of $20 in bellies. Movement at midday was 179.51 loads.
Technical analysis: April lean hog futures bulls still have the solid overall near-term technical advantage. Prices are trending higher on the daily bar chart. The next upside price objective for the hog bulls is to close April futures prices above solid chart resistance at $100.00. The next downside price objective for the bears is closing prices below solid technical support at $92.50. First resistance is seen at today’s contract high of $99.80 and then at $100.00. First support is seen at $97.00 and then at $96.00.
What to do: Get current with feed coverage.
Hedgers: You have 50% of Q2 production hedged with all remaining risk in the cash market.
Feed needs: You should have all your soymeal needs covered through March in the cash market. You should also have corn-for-feed needs purchased through March. Be prepared to make additional purchases.
Cattle
Price action: April live cattle rose 17 1/2 cents to $241.80, nearer the session low and hit a 3.5-month high early on. March feeder cattle gained $2.15 to $370.075, near mid-range and hit a three-month-high.
Fundamental analysis: The live and feeder cattle futures markets saw more mild to moderate chart-based buying from the speculators today, amid bullish technicals and solid cash market fundamentals, too. USDA today said there was no reportable cash cattle trading yet this week. We look for at least steady cash cattle trade to develop Thursday or Friday. Last week’s average cash cattle trade was $239.44, up $4.74 from the week prior’s average cash trade at $234.70. The noon report today showed wholesale boxed beef cutout values weaker. Choice-grade was down 57 cents at $370.14, while Select-grade lost 52 cents to $366.71. Movement at midday was light at 58 loads. The Choice-Select spread at midday today was plus $3.43.
Technical analysis: The live and feeder cattle futures bulls have the firm overall near-term technical advantage amid price uptrends in place on the daily bar charts. The next upside price objective for the live cattle bulls is to close April futures above resistance at the contract high of $250.925. The next downside technical objective for the bears is closing prices below solid technical support at the January low of $231.275. First resistance is seen at today’s high of $244.575 and then at $246.00. First support is seen at $240.00 and then at this week’s low of $238.00.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at the contract high of $378.60. The next downside price objective for the bears is to close prices below solid technical support at $353.00. First resistance is seen at today’s high of $373.60 and then at $375.00. First support is seen at this week’s low of $363.15 and then at $360.00.
What to do: Cover corn-for-feed needs through March 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 March. You have corn-for-feed needs covered through March as well. Be prepared to make additional purchases if value prices continue.