Hogs
Price action: February lean hogs fell 12 1/2 cents to $80.175, near mid-range.
Fundamental analysis: Lean hog futures today saw some mild technical selling pressure as the overall chart posture for the market remains bearish. Solid gains in the cattle futures markets limited selling interest in lean hog futures. Steadily falling cash hog prices will continue to constrain lean hog futures bulls until the cash hog market stabilizes and starts to turn back up. Daily losses in the cash and CME lean hog index have begun to get smaller.
The latest CME lean hog index is down another 25 cents to $81.67. Wednesday’s projected cash index price is down another 6 cents at $81.61. Today’s national direct 5-day rolling average cash hog price quote is $70.06. The noon report today showed pork cutout value up 22 cents to $95.01, led by gains in picnics. Movement at midday was 209.12 loads.
Technical analysis: February lean hog futures bears have the overall near-term technical advantage. However, a price downtrend on the daily bar chart is in jeopardy. 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 $82.275 and then at $83.60. First support is seen at $78.825 and then at $78.00.
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: February live cattle rose $4.875 to $220.80, nearer the daily high. January feeder cattle gained $8.80 to $329.875, near the session high and hit a three-week high.
Fundamental analysis: The live and feeder cattle futures markets bulls needed to show power early this week and did just that today. Recent price action suggests both markets have put in near-term bottoms. But bulls have heavy lifting to do in the near term if they want to establish fresh prices uptrends. Reports of very light cash cattle taking place so far this week, with steers and heifers averaging $215.00, encouraged buying interest in futures today. However, boxed beef declined at midday. USDA Monday reported last week’s average cash cattle trading price was $211.53, which is down $5.88 from the week prior. The noon report today showed wholesale boxed beef cutout values lower, with Choice-grade down $2.69 at $366.20, while Select-grade fell $4.74 to $353.14. Movement at midday was 73 loads. The Choice-Select spread is presently $13.06.
Technical analysis: The live and feeder cattle futures bears still have the overall near-term technical advantage. Prices are still in downtrends on the daily bar charts. The next upside price objective for the live cattle bulls is to close February futures above resistance at $223.05. The next downside technical objective for the bears is closing prices below solid technical support at the November low of $204.325. First resistance is seen at last week’s high of $219.325 and then at $223.05. First support is seen at $213.00 and then at $210.00.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $328.075. The next downside price objective for the bears is to close prices below solid technical support at the November low of $299.525. First resistance is seen at today’s high of $325.50 and then at $328.075. First support is seen at Friday’s low of $315.15 and then at $310.00.
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.