Hogs
Price action: December lean hogs fell 67 1/2 cents to $80.60, nearer the session low and hit a 3.5-month low.
Fundamental analysis: The lean hog futures market today saw more technical selling pressure amid overall bearish price charts that include a price downtrend in place for December hogs. Steadily falling cash hog prices are also bearish for futures. December hog futures still have a discount to the cash index, which may work to limit selling interest in futures.
The latest CME lean hog index is down another 34 cents at $91.19. Tuesday’s projected cash hog index is down another 21 cents at $90.98. Today’s national direct 5-day rolling average cash hog price quote is $87.72. The noon report today showed pork cutout value up $1.24 to $103.19, led by gains in picnics and ribs. Movement at midday was 157.11 loads.
Technical analysis: December lean hog futures bears have the firm 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 $84.00. 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 today’s high of $81.725 and then at $83.00. First support is seen at today’s low of $79.775 and then at $79.00.
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 rose $2.525 to $232.20 and near the daily high. January feeder cattle gained $4.625 to $336.525 and near the daily high.
Fundamental analysis: The live cattle futures markets today saw more corrective buying and perceived bargain hunting after the recent steep price declines. Rebounding boxed beef prices are also supportive for the cattle futures markets. Bulls are still worried about bearish pennant patterns that have formed on the daily bar charts. However, those patterns will have to see bearish downside breakouts this week or they will be negated.
USDA today reported last week’s 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 higher, with Choice-grade up $1.42 to $379.55, while Select gained $2.29 to $360.94. Movement at midday was light at 39 loads. The Choice-Select spread is presently $18.61.
Technical analysis: The live and feeder cattle futures bears still have the overall near-term technical advantage. Prices are still in downtrends on the daily bar charts. And while recent price action begins to suggest near-term price bottoms are in place, there is also the specter of bearish pennant patterns on the daily bar charts. The next upside price objective for the live cattle bulls is to close December futures above resistance at $238.00. The next downside technical objective for the bears is closing prices below solid technical support at the October low of $223.175. First resistance is seen at last week’s high of $234.075 and then at $236.00. First support is seen at $230.00 and then at $228.00.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $348.175, which is the top of a downside price gap on the daily chart. The next downside price objective for the bears is to close prices below solid technical support at the October low of $320.675. First resistance is seen at last week’s high of $340.50 and then at $344.00. First support is seen at today’s low of $332.50 and then at $327.50.
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.