Hogs
Price action: April lean hog futures rose 17 1/2 cents to $95.75, nearer the daily high.
Fundamental analysis: Lean hog futures today saw a pause. Keen risk aversion in the general marketplace limited the upside in hog futures, while firming cash hog prices limited the downside in futures. Pork packers presently see their cutting margins in the black, which should work to support firmer cash hog prices.
The latest CME lean hog index is up 25 cents at $89.69. Wednesday’s projected cash index price is up another 15 cents at $89.84. The national direct five-day rolling average cash hog price quote today is $68.47. The noon report today showed pork cutout value down 91 cents at $97.59, led by losses in hams. Movement at midday was decent at 195.11 loads.
Technical analysis: April lean hog futures bulls have the near-term technical advantage but a new price uptrend on the daily chart is stalling out. The next upside price objective for the hog bulls is to close April futures prices above solid chart resistance at the contract high of $99.80. The next downside price objective for the bears is closing prices below solid technical support at the February low of $91.125. First resistance is seen at last week’s high of $96.65 and then at $97.50. First support is seen at today’s low of $94.70 and then at $93.00.
What to do: Get current with feed coverage.
Hedgers: You have 50% of Q2 production hedged with all remaining risk in the cash market.
Feed needs: You should have all your soymeal needs covered through March in the cash market. You should also have corn-for-feed needs purchased through March. Be prepared to make additional purchases.
Cattle
Price action: April live cattle rose $1.025 to $234.125, near the daily high. March feeder cattle fell 7 1/2 cents to $357.20, nearer the session high.
Fundamental analysis: The live cattle futures markets today saw corrective buying, including short covering from the shorter-term speculative traders. Feeder futures saw a pause today. Both markets Monday hit two-month lows and near-term chart damage has been inflicted. A bigger risk-off trading day in the general marketplace today than that seen on Monday limited buying interest in the cattle futures markets.
Live cattle futures continue to trade well below the cash market. Reports of weaker cash trade this week are beginning to circulate, indicating weaker futures trade could be pulling cash bids down. Beef packer cutting margins are still deep in the red, suggesting packers will be less willing to bid up for supplies. USDA today at midday reported no cash cattle trading yet this week, though some reports said light cash trade in the southern Plains this week is at sharply lower levels. The agency Monday reported last week’s cash cattle trading averaged $242.71--down $4.20 from the prior week’s average. The noon report today showed wholesale boxed beef cutout values firmer. Choice-grade was up $6.60 at $387.93, while Select-grade rose $1.53 to $379.74. Movement at midday was 54 loads. The Choice-Select spread at midday today was plus $8.20.
Technical analysis: The live and feeder cattle futures have seen price uptrends on the daily bar charts negated to produce serious near-term technical damage. The next upside price objective for the live cattle bulls is to close April futures above resistance at $238.00. The next downside technical objective for the bears is closing prices below solid technical support at 225.00. First resistance is seen at $235.00 and then at $236.00. First support is seen at today’s low of $230.725 and then at this week’s low of $228.525.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance $370.00. The next downside price objective for the bears is to close prices below solid technical support at $340.00. First resistance is seen at today’s high of $358.675 and then at $360.00. First support is seen at today’s low of $352.30 and then at this week’s low of $350.30.
What to do: Cover corn-for-feed needs through March in the cash market. 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 March. You have corn-for-feed needs covered through March as well. Be prepared to make additional purchases if value prices continue.