Hogs
Price action: February lean hogs fell 67 1/2 cents to $83.85, but closed nearer the daily high.
Fundamental analysis: Lean hog futures saw some routine profit-taking pressure from the shorter-term speculators today, after prices Friday hit a six-week high. Still, the near-term chart posture for the market remains bullish. Recent gains in the cash market and the CME hog index also suggest seasonal bottoms are in place for cash and futures markets. February lean hogs have pushed above the CME lean hog index, also a positive sign.
The latest CME lean hog index is up 23 cents to $82.80. Tuesday’s projected cash index price is up another 19 cents at $82.99. Today’s national direct 5-day rolling average cash hog price quote is $71.84. The noon report today showed pork cutout value down 63 cents to $98.21, led by losses in hams. Movement at midday was good at 282.84 loads.
Technical analysis: February lean hog futures bulls still have the overall near-term technical advantage. Prices are trending up on the daily chart. The next upside price objective for the hog bulls is to close February futures prices above solid chart resistance at $87.00. The next downside price objective for the bears is closing prices below solid technical support at last week’s low of $80.65. First resistance is seen at last week’s high of $85.075 and then at $86.375. First support is seen at $82.00 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 February in the cash market. You are hand-to-mouth for corn-for-feed needs. Be prepared to make additional purchases.
Cattle
Price action: February live cattle rose $1.00 to $230.55, nearer the daily high. January feeder cattle gained 82 1/2 cents to $330.925, near mid-range.
Fundamental analysis: The cattle futures markets today saw some modest technical buying to start the trading week, after recent solid gains. Prices are still trending higher on the daily bar charts, which should continue to attract the technically oriented speculators to the buy side. Solidly higher cash cattle trade last week at much better money is also supportive for the cattle futures markets.
USDA at midday today reported the average cash cattle trading price last week was $228.19, up $6.98 from the week prior. The noon report today showed wholesale boxed beef cutout values firmer, with Choice-grade up $1.20 at $358.64, while Select-grade rose $2.49 to $346.71. Movement at midday was 71 loads. The Choice-Select spread is presently $11.93.
Technical analysis: The live and feeder cattle futures bulls have the firm near-term technical advantage. Prices are trending up on the daily bar charts, suggesting the path of least resistance will remain sideways to higher in the near term. The next upside price objective for the live cattle bulls is to close February futures above resistance at $235.00. The next downside technical objective for the bears is closing prices below solid technical support at $225.00. First resistance is seen at last week’s high of $231.775 and then at $233.00. First support is seen at $228.70 and then at this week’s low of $225.65.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $348.175, which is the top of a downside price gap on the daily bar chart. The next downside price objective for the bears is to close prices below solid technical support at $330.00. First resistance is seen at today’s high of $341.375 and then at last week’s high of $345.25. First support is seen at $336.00 and then at $335.00.
What to do: Cover soymeal 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 February. You are hand-to-mouth for corn-for-feed needs. Be prepared to make additional purchases if value prices continue.