Hogs
Price action: December lean hog futures fell $0.075 to $55.80, nearer the daily low.
Fundamental analysis: The lean hog futures market saw tepid short covering and perceived bargain hunting early on today after the market slumped to contract lows last week. Bulls faded down the stretch, however. Buying interest in lean hog futures continues to be constrained by cash hog prices and the CME cash index continuing to trend lower.
The latest CME lean hog index is down $1.29 to $60.28. Wednesday’s projected CME index price is down $0.29 at $59.99. The national direct five-day rolling average cash hog price quote for today is $40.98. The USDA noon pork report today showed cutout value was down $0.97 at $69.84, led by losses in loins. Movement at midday was decent at 204.19 loads.
Technical analysis: December lean hog futures see a price downtrend in place on the daily chart. However, strong gains the rest of this week would begin to suggest a market bottom is in place. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at $60.00. The next downside price objective for the bears is closing prices below solid technical support at the contract low of $53.175. First resistance is seen at $57.10 and then at $58.00. First support is seen at $55.00 and then at $54.00.
What to do: Get current with feed coverage.
Hedgers: You currently have all risk in the cash market.
Feed needs: You are covered through the end of December for corn-for-feed and covered through November for soymeal for feed needs. Be prepared to make purchases if value prices arise from fall harvest pressure.
Cattle
Price action: December live cattle rose $3.00 to $219.20, near the daily high. January feeder cattle gained $2.50 to $326.675, near the daily high.
Fundamental analysis: The cattle futures markets saw more short covering and perceived bargain buying today and price action the past three sessions suggests the bears are exhausted and that a market bottoms may be in place. Gains in feeder cattle futures were somewhat tempered today as corn futures prices rallied after a bullish USDA monthly supply and demand report.
USDA at midday today reported no cash trading yet this week. Last week’s cash cattle average price was $215.43, down over $8 from the week prior. The noon report today showed firmer boxed beef prices, with Choice grade up $2.57 at $365.31 and Select grade up $0.58 at $354.31. Movement at midday was 57 loads. The Choice-Select spread is presently plus $11.00.
Technical analysis: December live cattle and November feeders see price downtrends on their daily charts in some jeopardy. Recent price action suggests the bears have become exhausted and that near-term market bottoms are in place. The next upside price objective for the live cattle bulls is to close December futures above resistance at $225.00. The next downside technical objective for the bears is closing prices below solid technical support at last week’s low of $210.85. First resistance is seen at $220.00 and then at $222.00. First support is seen at this week’s low of $214.70 and then at $213.00.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at last week’s high of $334.675. The next downside price objective for the bears is to close prices below solid technical support at last week’s low of $312.05. First resistance is seen at this week’s high of $327.35 and then at $330.00. First support is seen at this week’s low of $319.525 and then at $317.00.
What to do: You are covered through the end of December for corn-for-feed, and are hand to mouth for soymeal for feed needs. Be prepared to make purchases if value prices arise from fall harvest pressure.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You are covered through the end of December for corn-for-feed and covered through November for soymeal for feed needs. Be prepared to make purchases if value prices arise from fall harvest pressure.