Hogs
Price action: February lean hogs fell 52 1/2 cents to $81.875, near the daily high.
Fundamental analysis: Lean hog futures today saw some mild profit taking following recent good gains. Bullish traders are thinking the cash hog market has put in a seasonal bottom, which is keeping a floor under futures prices. Also, lean hog futures prices are trending up on the daily bar chart, which is inviting chart-based speculators to play the long side.
The latest CME lean hog index is up 3 cents to $81.84. Wednesday’s projected cash index price is up 5 cents at $81.89. Today’s national direct 5-day rolling average cash hog price quote is $70.66. The noon report today showed pork cutout value up $2.76 to $98.27, led by gains in bellies. Movement at midday was decent at 183.41 loads.
Technical analysis: February lean hog futures bulls have the slight overall near-term technical advantage as 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 the November high of $83.60. The next downside price objective for the bears is closing prices below solid technical support at the November low of $77.125. First resistance is seen at last week’s high of $83.025 and then at $83.60. First support is seen at $81.50 and then at today’s low of $80.65.
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: February live cattle rose 27 1/2 cents to $226.95, near mid-range and hit a five-week high. January feeder cattle fell 15 cents to $335.50, near mid-range.
Fundamental analysis: The live cattle futures market today saw light chart-based buying as the technicals have turned more positive. Feeders futures traders paused today. Selling interest in cattle futures was limited today by the solidly higher cash cattle trade this week. Also, very light trading so far this week sees cattle coming in at higher money.
USDA at midday today reported very light cash cattle trading taking place at $222.00. The average cash cattle trade for last week was $221.21, which is up $9.68 from the prior week’s average of $211.53. The noon report today showed wholesale boxed beef cutout values higher, too, with Choice-grade up $2.07 at $362.97, while Select-grade gained $1.32 to $349.92. Movement at midday was decent at 80 loads. The Choice-Select spread is presently $13.05.
Technical analysis: The live and feeder cattle futures bulls have the near-term technical advantage as prices are trending up on the daily bar charts, to firmly suggest near-term market bottoms are in place. The next upside price objective for the live cattle bulls is to close February futures above resistance at $233.425, 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 $215.00. First resistance is seen at $229.00 and then at $230.00. First support is seen at $225.00 and then at $222.50.
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 bar chart. The next downside price objective for the bears is to close prices below solid technical support at $315.00. First resistance is seen at last week’s high of $340.075 and then at $343.00. First support is seen at today’s low of $332.75 and then at $330.00.
What to do: You are hand-to-mouth for corn-for-feed needs. 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 December. You are hand-to-mouth for corn-for-feed needs. Be prepared to make additional purchases. Be prepared to make additional purchases if value prices continue.