Livestock Analysis | April 9, 2024
Price action: June lean hogs closed up 65 cents at $108.575 and nearer the session high. Prices hit another contract high today.
Fundamental analysis: Technical-based speculator buying interest was featured today amid fully bullish near-term charts. Cash hog market fundamentals are also improving. However, nearby futures prices do face stiff technical resistance layers just above present prices.
The latest CME lean hog index was up another 74 cents to $87.05 as of April 5. The cash index for Wednesday is projected up another 83 cents to $87.88. The national direct five-day rolling average cash hog price today was quoted at $85.82. The noon report today showed pork cutout value rose another 48 cents to $100.81, led higher by gains in hams. The cutout this week has risen above $100.00 for the first time since last September. Movement at midday was decent at 169.44 loads. The stronger wholesale pork prices have boosted cash hog prices as well, giving packers the margin to pay up for hogs.
Technical analysis: The lean hog futures bulls have the solid overall near-term technical advantage. Prices are in a two-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 $112.00. The next downside price objective for the bears is closing prices below solid technical support at $100.00. First resistance is seen at today’s contract high of $109.175 and then at $110.00. First support is seen at this week’s low of $106.625 and then at $105.00.
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: June live cattle futures surged $1.525 higher to $174.85, settling nearer session highs. Nearby April futures rose $1.30 to $180.70. May feeder cattle futures leapt $2.275 to $239.45.
Fundamental analysis: Live cattle and feeder futures saw continued corrective buying today, narrowing the gap between nearby futures and the cash market. After falling last week, cash cattle trade is off to a modest start to the week. Light trade was reported in Iowa on Monday, with 36 head of cattle trading hands at $186.00. While light, the precedence for higher cash cattle trade to start the week could signal the downside in cattle prices will be limited. This is supported by our belief that continued strength in the wholesale market could limit losses in the cash cattle market, despite packers’ efforts to increase market-ready cattle supplies by cutting slaughter counts. April futures continue to trade at a sharp discount to the cash market, which is likely to limit the downside in that contract as it enters delivery. June futures trading at over a $10.00 discount to the cash market shows how pessimistic traders have become. The recent rebound in wholesale beef prices has rekindled bullish hopes among some traders. Choice cutout rose another 63 cents to $302.70 while Select jumped $1.70 to $301.97 at midsession. Movement firmed to 69 loads this morning, not far below yesterday’s total of 77 loads for the entire day.
Feeder cattle negated all of Monday’s weakness as well and showed strength amid corn weakness. The feeder cattle index, which most recently fell 35 cents to $248.62, continues to trade well above futures and has posted relative strength to futures since the sell-off began in mid-March.
Technical analysis: June live cattle futures posted strong gains for the second consecutive session, though remain within last Friday’s range. Bears continue to maintain control of the near-term technical advantage. Bulls are seeking to overcome resistance at $175.60, which is backed by the 10-day moving average at $176.25. A daily close above the 200-day moving average at $177.50 would indicate a significant shift in momentum for the bulls. Meanwhile, further selling finds support at $173.325, last Friday’s close at $172.05, then the psychological $170.00 mark.
May feeder cattle futures reversed Monday’s losses, though bears retain full control of the near-term technical advantage. Bulls are seeking to overcome resistance at $240.375, $242.575, then the 10-day moving average at $243.40, which has not traded since it’s failure as support on March 22. A reversal lower finds support at $240.00, yesterday’s close at $237.175, then the psychological $235.00 mark.
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.
