Hogs
Price action: December lean hogs fell $1.10 to $86.175, nearer the session low and closed at a six-week-low close.
Fundamental analysis: The lean hog futures market saw more technical selling featured today, after last week’s price downdraft produced serious near-term chart damage, to suggest a market top is in place. Selling interest was somewhat limited today amid lean hog futures’ discounts to the cash hog index. Cash and fresh pork fundamentals have been weakening lately. The latest CME lean hog index is down 82 cents at $102.02. Wednesday’s projected cash hog index is down another 60 cents at $101.42. Today’s national direct 5-day rolling average cash hog price quote is $98.80. The noon report today showed pork cutout value up $1.51 to $108.86, led by gains in hams and picnics. Movement at midday was 181.70 loads.
Technical analysis: December lean hog futures bears have the near-term technical advantage. A rare and bearish broadening pattern has formed on the daily bar chart, to also suggest a market top is in place. A bearish flag or pennant pattern may also be forming on the daily chart. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at $90.00. The next downside price objective for the bears is closing prices below solid technical support at $84.00. First resistance is seen at this week’s high of $87.80 and then at $89.00. First support is seen at last week’s low of $85.574 and then at $84.00.
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 $1.05 to $237.725, near the daily high and hit a two-week high. November feeder cattle rose $3.45 to $364.25, near the session high and hit a five-week high.
Fundamental analysis: The live and feeder cattle futures markets bulls today saw mixed trade on both sides of unchanged early. Then in late trading the bulls put their foot on the gas. A rise in boxed beef cutout values this week boosted bullish enthusiasm in cattle futures. However, solid technical resistance levels lie just above present prices, which may keep the chart-based speculator bulls timid in the near term. Also, after three up-days in a row, live and feeder cattle futures are now due for corrective pullbacks.
USDA today reported very light cash cattle trade taking place at an average of $227.00. Monday the agency reported cash cattle trading last week averaged $230.76. That’s down $1.89 from the prior week’s USDA reported average of $232.65. The noon report today showed wholesale boxed beef cutout values firmer again, with Choice-grade $1.19 to $364.53, while Select rose 94 cents to $348.91. Movement at midday was decent at 86 loads. The Choice-Select spread is presently $15.62.
Technical analysis: The live and feeder cattle futures bulls have the overall near-term technical advantage. However, there are very strong chart resistance levels that lie just above present prices. The next upside price objective for the live cattle bulls is to close December futures above resistance at $241.35. The next downside technical objective for the bears is closing prices below solid technical support at the September low of $230.075. First resistance is seen at today’s high of $238.325 and then at $240.00. First support is seen at $235.00 and then at this week’s low of $233.75.
The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at the contract high of $367.65. The next downside price objective for the bears is to close prices below solid technical support at $349.125. First resistance is seen at today’s high of $365.175 and then at $367.65. First support is seen at $360.00 and then at $357.00.
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.