Hogs
Price action: April lean hog futures fell $0.475 to $90.80, near the daily low and hit a nine-week low.
Fundamental analysis: Lean hog futures today saw more technical selling pressure today amid a price downtrend in place on the daily bar chart. The rally in the cash hog market has also stalled out, which is limiting buying interest in futures.
The latest CME lean hog index is down 9 cents at $91.95. Tuesday’s projected cash index price is down another 18 cents at $91.77. The national direct five-day rolling average cash hog price quote today is $69.09. The noon report today showed pork cutout value up $0.80 at $100.00, led by gains in picnics and bellies. Movement at midday was 180.57 loads.
Technical analysis: April lean hog futures bears have the near-term technical advantage. Prices are in a three-week-old 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 $94.00. The next downside price objective for the bears is closing prices below solid technical support at $90.00. First resistance is seen at $92.00 and then at $93.00. First support is seen at $90.00 and then at $89.00.
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 $1.25 to $235.30, nearer the daily high. March feeder cattle gained $1.975 to $348.35, near the daily high.
Fundamental analysis: The cattle futures markets early on today saw some sideways pausing action amid volatile outside markets that are keeping both the cattle market bulls and bears tentative to start the trading week. However, late-session gains in cattle futures can be at least partly attributed to higher cash cattle trade reported for last week and the increased risk appetite in the general marketplace today amid solid gains in the U.S. stock indexes and a big drop in crude oil prices.
USDA today at midday reported cash cattle trading last week averaged $235.08—up $0.25 from the week prior average of $234.83. The noon report today showed wholesale boxed beef cutout values firmer. Choice-grade was up $0.61 at $399.50, while Select-grade was up $0.62 at $393.56. Movement at midday was light at 35 loads. The Choice-Select spread at midday today was plus $5.94.
In the Plains states, the extreme heat of the weekend and that expected again during mid-week this week was and will be stressful to livestock.
Technical analysis: Cattle futures markets bulls have shown resilience recently. Price downtrends on the daily bar charts have stalled out. 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 the March low of $227.325. First resistance is seen at last week’s high of $235.70 and then at $237.00. First support is seen at $232.50 and then at last week’s low of $230.825.
The next upside price objective for the feeder bulls is to close May futures prices above technical resistance at $357.80. The next downside price objective for the bears is to close prices below solid technical support at the March low of $336.45. First resistance is seen at last week’s high of $351.30 and then at $354.00. First support is seen at $342.55 and then at $340.00.
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.