Hogs
Price action: April lean hog futures fell $1.225 to $96.725, near mid-range.
Fundamental analysis: Lean hog futures today saw more profit-taking pressure from the shorter-term traders. While the charts remain overall bullish, recent price action does suggest the bulls have become exhausted.
The latest CME lean hog index is up 19 cents at $83.57. Tuesday’s projected cash index price is down 11 cents at $86.46. The national direct five-day rolling average cash hog price quote today is $64.27. The noon report today showed pork cutout value up $2.52 at $96.29, led by gains in bellies, ribs and butts. Movement at midday was decent at 181.81 loads.
Technical analysis: April lean hog futures bulls have the overall near-term technical advantage but are fading a bit. Prices are still in an uptrend 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 $100.00. The next downside price objective for the bears is closing prices below solid technical support at $92.50. First resistance is seen at today’s high of $97.625 and then at $87.875—the top of today’s downside price gap on the daily bar chart. First support is seen at $96.00 and then at $95.00.
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 95 cents to $238.20, near mid-range. March feeder cattle rose 2 1/2 cents to $367.45, near mid-range.
Fundamental analysis: The live cattle market saw some follow-through technical buying today, while feeder futures paused, after more active trading in both futures markets the latter half of last week. The charts are beginning to suggest the cattle futures bulls may be getting tired after the rallies from the November lows. However, selling interest in futures is limited by cash and beef market fundamentals that are still solid.
USDA today reported cash cattle trading last week averaged $241.31, up $1.87 from prior week’s average cash cattle trade at $239.44. The noon report today showed wholesale boxed beef cutout values firmer. Choice-grade was up 28 cents at $369.61, while Select-grade rose $2.06 to $366.59. Movement at midday was light at 23 loads. The Choice-Select spread at midday today was plus $3.02.
Technical analysis: The live and feeder cattle futures bulls still have the overall near-term technical advantage amid price uptrends in place on the daily bar charts. However, the bulls appear tired. The next upside price objective for the live cattle bulls is to close April futures above resistance at the contract high of $250.925. The next downside technical objective for the bears is closing prices below solid technical support at the January low of $231.275. First resistance is seen at $240.00 and then at $241.00. First support is seen at Friday’s low of $236.475 and then at last week’s low of $234.55.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at the contract high of $378.60. The next downside price objective for the bears is to close prices below solid technical support at $353.00. First resistance is seen at $370.00 and then at last week’s high of $373.60. First support is seen at $365.00 and then at last week’s low of $360.825.
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.