Hogs
Price action: February lean hog futures fell 87 1/2 cents to $84.425, near mid-range and hit a three-week low.
Fundamental analysis: Lean hog futures today saw profit taking and weak long liquidation, amid a backslide in the cash hog market and the CME lean hog index. Futures traders may also be thinking the February lean hog futures contract’s premium to the latest CME lean hog index had gotten too rich.
The latest CME lean hog index is down 13 cents to $80.85. Tuesday’s projected cash index price is down another 25 cents at $80.60. Today’s national direct 5-day rolling average cash hog price quote is $68.56. The noon report today showed pork cutout value up $1.91 at $94.23, led by losses in ribs and bellies. Movement at midday was 156.54 loads.
Technical analysis: February lean hog futures are fading as a price uptrend on the daily bar chart has at least been temporarily negated. The next upside price objective for the hog bulls is to close February futures prices above solid chart resistance at the January high of $86.50. The next downside price objective for the bears is closing prices below solid technical support at $82.00. First resistance is seen at today’s high of $85.35 and then at $86.00. First support is seen at today’s low of $83.775 and then at last week’s low of $82.50.
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 March in the cash market. You should also have corn-for-feed needs purchased through February. Be prepared to make additional purchases.
Cattle
Price action: February live cattle rose $1.525 to $235.25, near mid-range. March feeder cattle gained $1.475 to $356.175, nearer the session high.
Fundamental analysis: The cattle futures markets today saw corrective bounces from Friday’s losses. Bulls were impressive today, after Friday’s technically bearish weekly low closes that seemingly gave the bears the edge to start the trading week. Beef packer margins that are presently in the red did and that somewhat limited buying interest in cattle futures today.
USDA today reported cash cattle trading last week average at $231.86, which is up 18 cents from cash cattle trade the prior week at $231.68. The noon report today showed wholesale boxed beef cutout values higher. Choice-grade was up $1.64 at $357.27, while Select-grade gained $3.17 to $355.34. Movement at midday was light at 22 loads. The Choice-Select spread at midday today narrowed to $1.93.
Technical analysis: The live and feeder cattle futures bulls have the firm overall near-term technical advantage. Price uptrends are in place on the daily bar charts. The next upside price objective for the live cattle bulls is to close February futures above resistance at $240.375, 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 $226.85. First resistance is seen at today’s high of $236.225 and then at last week’s high of $237.45. First support is seen at last week’s low of $233.125 and then at $232.00.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at $370.00. The next downside price objective for the bears is to close prices below solid technical support at $343.00. First resistance is seen at last week’s high of $359.35 and then at $361.00. First support is seen at last week’s low of $353.35 and then at $350.00.
What to do: Cover corn-for-feed needs through February 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 February as well. Be prepared to make additional purchases if value prices continue.