Hogs
Price action: April lean hog futures rose 22 1/2 cents to $93.725, near mid-range.
Fundamental analysis: Lean hog futures this week are pausing as bulls work to stabilize the market after recent selling pressure. This week’s minor gains in hog futures prices, amid solid gains in the cattle futures, is not a good sign for hogs. The near-term technical posture of the lean hog futures market has deteriorated the past two weeks.
The latest CME lean hog index is up 16 cents at $91.76. Wednesday’s projected cash index price is up another 10 cents at $91.86. The national direct five-day rolling average cash hog price quote today is $69.80. The noon report today showed pork cutout value down 2 cents at $100.42, led by declines in loins and bellies. Movement at midday was 148.88 loads.
Technical analysis: April lean hog futures bulls have faded recently. Prices are in a fledgling downtrend on the daily bar chart. The next upside price objective for the hog bulls is to close April futures prices above solid chart resistance at the March high of $97.30. The next downside price objective for the bears is closing prices below solid technical support at the February low of $91.125. First resistance is seen at $95.00 and then at $96.00. First support is seen at last week’s low of $93.10 and then at $92.00.
What to do: Get current with feed coverage.
Hedgers: You have 50% of Q2 production hedged with all remaining 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 March. Be prepared to make additional purchases.
Cattle
Price action: April live cattle rose $1.975 to $235.225, nearer the daily high. March feeder cattle gained $4.35 to $359.80, near the daily high.
Fundamental analysis: The cattle futures markets today continued good corrective rebounds amid perceived bargain hunting. Once again, the cattle bulls have shown keen resilience when their chips get down. Better risk appetite in the general marketplace so far this week is also a positive for the cattle futures markets.
Work has stopped at the Greeley, Colorado JBS facility amid a union strike. The company is shifting cattle deliveries to facilities in Grand Island, NE and Cactus, TX. Cattle traders will continue to closely monitor this situation.
USDA Monday reported lower cash cattle trading last week, with the average price of $234.83—down $5.11 from the week prior. The noon report today showed wholesale boxed beef cutout values up again. Choice-grade was up $1.08 at $403.74, while Select-grade rose $4.49 to $399.00. Beef packer cutting margins have moved back solidly into the black amid weaker cash prices and higher boxed-beef prices. Movement at midday was 63 loads. The Choice-Select spread at midday today was plus $4.74.
In the Plains states, high temperatures will reach the lower 100’s in some places in the southwest this Friday and Saturday. The heat will notably stress livestock, especially after the rapid change from early-week unusually cold weather.
Technical analysis: Cattle futures markets bulls have regained momentum, to put price downtrends on the daily bar charts in jeopardy now. The next upside price objective for the live cattle bulls is to close April futures above resistance at $239.95. The next downside technical objective for the bears is closing prices below solid technical support at last week’s low of $227.325. First resistance is seen at $236.00 and then at $238.00. First support is seen at today’s low of $233.60 and then at this week’s low of $230.825.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at $364.825. The next downside price objective for the bears is to close prices below solid technical support at $340.00. First resistance is seen at $360.00 and then at $364.825. First support is seen at today’s low of $355.925 and then at this week’s low of $350.625.
What to do: Cover corn-for-feed needs through March 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 March as well. Be prepared to make additional purchases if value prices continue.