Hogs
Price action: December lean hogs fell 67 1/2 cents to $80.825, near the daily low and hit a three-month low.
Fundamental analysis: The lean hog futures market saw more chart-based selling pressure from the speculators today. Bearish technicals, steadily declining cash hog prices and very shaky cattle futures markets recently are all weighing on the hog futures market. December lean hog futures’ discount to the cash index has somewhat limited selling interest in futures lately.
The latest CME lean hog index is down another 68 cents at $92.27. Wednesday’s projected cash hog index is down another 24 cents at $92.03. Today’s national direct 5-day rolling average cash hog price quote is $88.16. The noon report today showed pork cutout value down 4 cents to $101.04. Movement at midday was decent at 192.61 loads.
Technical analysis: December lean hog futures bears have the firm overall near-term technical advantage. Prices are in a steep 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 $80.00. First resistance is seen at this week’s high of $82.575 and then at last week’s high of $84.05. First support is seen at $80.00 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 fell 60 cents to $226.575 and near mid-range. January feeder cattle dropped another $9.55 to $324.875, nearer the daily low and hit a three-month low.
Fundamental analysis: The live cattle futures markets bulls are working to stabilize prices amid the present steep downdraft. However, the bleeding continues in feeder cattle futures. Long liquidation and likely margin-call selling by the speculative futures traders has been featured in the live and feeder cattle futures markets the past five sessions. This follows news last week that President Trump vowed to lower U.S. beef prices. Meantime, Mexico’s agriculture minister will travel to Washington D.C. this week to work on an agreement to reopen the U.S. border to Mexican cattle.
It was surprising to see USDA report active cash cattle trading so early in the week. Producers must be spooked that lower cash cattle prices are coming. USDA at midday today reported active trade at $229.79 versus last week’s average of $237.89. The noon report today showed wholesale boxed beef cutout values mixed, with Choice-grade up 80 cents to $378.68, while Select fell 30 cents to $361.36. Movement at midday was 70 loads. The Choice-Select spread is presently $17.32.
Technical analysis: The live and feeder cattle futures bears have the solid overall near-term technical advantage. Prices are in steep downtrends on the daily bar chart. The next upside price objective for the live cattle bulls is to close December futures above resistance at this week’s high of $234.075. The next downside technical objective for the bears is closing prices below solid technical support at $220.00. First resistance is seen at today’s high of $229.10 and then at $231.00. First support is seen at $225.00 and then at $223.00.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at this week’s high of $340.50. The next downside price objective for the bears is to close prices below solid technical support at $310.00. First resistance is seen at $327.00 and then at today’s high of $331.95. First support is seen at today’s low of $320.675 and then at $318.00.
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.