Hogs
Price action: December lean hogs fell $1.825 to $86.90, near the session low and closed at a four-week low close.
Fundamental analysis: More profit-taking pressure from the shorter-term speculative traders was featured in lean hog futures today. Today marks the third straight session of price losses, which suggests the bulls are now exhausted and that a market top may be in place.
Risk aversion was keener in the general marketplace today amid the U.S. government shutdown and following a very weak monthly ADP jobs report today.
Still, futures’ discounts to the cash hog index may limit further selling pressure in hog futures. Cash and fresh pork fundamentals are weakening. The latest CME lean hog index is down 5 cents at $104.73. Thursday’s projected cash hog index is down 47 cents at $104.26. Today’s national direct 5-day rolling average cash hog price quote is $102.43. The noon report today showed pork cutout value down $1.59 to $108.75. Movement at midday was good at 207.72 loads.
Technical analysis: December lean hog futures bulls still have the overall near-term technical advantage. However, a 2.5-month-old price uptrend on the daily bar chart is now in jeopardy. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at the contract high of $91.525. The next downside price objective for the bears is closing prices below solid technical support at $84.00. First resistance is seen at today’s high of $89.125 and then at Tuesday’s high of $90.475. First support is seen at the September low of $86.525 and then at $85.00.
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 October covered in the cash market.
Cattle
Price action: December live cattle fell 27 1/2 cents to $234.50, near mid-range. November feeder cattle lost $1.75 to $357.60 and near the daily low.
Fundamental analysis: The live and feeder cattle futures markets saw modest selling pressure at mid-week amid keener risk aversion in the general marketplace as the U.S. government shut down at midnight last night. A downbeat monthly U.S. ADP employment report today also limited buying interest in the cattle futures markets.
The FDA has conditionally approved Dectomax-CA1 (doramectin injection) injectable solution for the prevention and treatment of New World screwworm larval infestations, and prevention of NWS for 21 days. The conditional approval is for use in cattle only.
The cattle and fresh beef market fundamentals have weakened. That’s keeping the cattle futures bulls tentative. USDA reported cash cattle trading last week averaged $232.65, down $4.86 from the week prior. Very light cash cattle trading has been reported so far this week, with USDA reporting steers and heifers are averaging $233.00. The noon report today showed wholesale boxed beef cutout values mixed, with Choice-grade down 37 cents to $370.66, while Select rose $2.46 to $349.71. Movement at midday was good at 84 loads. The Choice-Select spread is presently $20.95.
Technical analysis: The live and feeder cattle futures bulls have faded recently to suggest major market tops are in place, as there are very strong chart resistance levels that lie above present prices. The next upside price objective for the live cattle bulls is to close December futures above resistance at last week’s high of $241.35. The next downside technical objective for the bears is closing prices below solid technical support at the September low of $230.075. First resistance is seen at today’s high of $236.45 and then at $238.00. First support is seen at this week’s low of $231.75 and then at $230.00.
The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at last week’s high of $363.775. The next downside price objective for the bears is to close prices below solid technical support at the September low of $342.125. First resistance is seen at $360.00 and then at today’s high of $362.775. First support is seen at $357.00 and then at $355.00.
What to do: Get current with feed coverage. Carry all production risk in the cash market for now.
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 October covered in the cash market. Be prepared to make additional purchases if value prices continue.