Hogs
Price action: December lean hogs fell $1.70 to $83.15, near the daily low and hit a seven-week low.
Fundamental analysis: The lean hog futures market saw more technical selling pressure today amid a rapidly eroding near-term technical posture and falling cash hog prices. Deteriorating relations between the U.S and China are also a bearish fundamental element for the hog futures market. China is a major pork importer, but has in recent months been avoiding purchasing U.S. ag products.
The latest CME lean hog index is down another 86 cents at $98.57. Wednesday’s projected cash hog index is down another 58 cents at $97.99. Today’s national direct 5-day rolling average cash hog price quote is $97.31. The noon report today showed pork cutout value up 32 cents to $103.91, led by gains in ribs and bellies. Movement at midday was decent at 186.66 loads.
Technical analysis: December lean hog futures bears have the firm overall near-term technical advantage and gained more power today. Prices are in a steep downtrend on the daily bar chart. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at $87.50. The next downside price objective for the bears is closing prices below solid technical support at $80.00. First resistance is seen at today’s high of $84.175 and then at this week’s high of $85.50. First support is seen at today’s low of $82.625 and then at $81.00.
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 rose $1.75 to $246.50, near the daily high and hit another contract high. November feeder cattle rose $4.60 to $381.325, nearer the daily high and hit another contract/record high.
Fundamental analysis: The cattle market bulls continue to press down hard on the accelerator amid overall solid supply and demand fundamentals in the cash cattle and beef markets, and bullish charts. Historically tight supplies of cattle in U.S. feedlots is a main bullish driver, but the recent rebound in cash cattle and boxed beef prices have also energized the bulls in cattle futures markets. The cattle futures markets are now short-term overbought, technically, and due for corrective price pullbacks soon.
USDA today reported very lite cash cattle trade at $236.00. Cash cattle trade last week averaged $234.07, up $3.31 from the prior week average. The noon report today showed wholesale boxed beef cutout values firmer, with Choice-grade up 70 cents to $364.61, while Select rose 67 cents to $350.42. Movement at midday was 67 loads. The Choice-Select spread is presently $14.19.
Technical analysis: The live and feeder cattle futures bulls have the solid overall near-term technical advantage. However, both markets are short-term overbought and due for downside corrections soon. The next upside price objective for the live cattle bulls is to close December futures above resistance at $250.00. The next downside technical objective for the bears is closing prices below solid technical support at $235.00. First resistance is seen at today’s contract high of $246.975 and then at $248.00. First support is seen at today’s low of $243.50 and then at this week’s low of $242.15.
The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at $390.00. The next downside price objective for the bears is to close prices below solid technical support at $360.00. First resistance is seen at today’s contract high of $382.80 and then at $385.00. First support is seen at today’s low of $375.175 and then at this week’s low of $373.375.
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.