Hogs
Price action: December lean hogs rose 67 1/2 cents to $80.60, near mid-range.
Fundamental analysis: The lean hog futures market today saw short covering and perceived bargain hunting after prices Tuesday hit a 3.5-month low. The cash hog market appears to be stabilizing, which also encouraged the hog futures bulls today. Bulls today also got some help from December hog futures’ discount to the cash index.
The latest CME lean hog index is down another 8 cents at $90.90. Thursday’s projected cash hog index is down 4 cents at $90.86. Today’s national direct 5-day rolling average cash hog price quote is $84.70. The noon report today showed pork cutout value up 15 cents to $99.32, led by a rise in loins. Movement at midday was good 208.47 loads.
Technical analysis: December lean hog futures bears still have the firm overall near-term technical advantage. Prices are in a steep five-week-old downtrend on the daily bar chart. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at $83.00. The next downside price objective for the bears is closing prices below solid technical support at the July low of $77.725. First resistance is seen at this week’s high of $81.725 and then at $83.00. First support is seen at today’s low of $79.925 and then at this week’s low of $79.375.
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 November covered in the cash market.
Cattle
Price action: December live cattle fell the $7.25 daily limit to $220.525 and hit a 3.5-month low. January feeder cattle fell the daily trading limit of $9.25 to $319.975 and hit a three-month low. Daily trading limits will be expanded Thursday.
Fundamental analysis: The live and feeder cattle futures markets today saw heavy technical selling pressure before locking down the daily trading limit. Price action this week has seen bearish downside “breakouts” from pennant patterns that formed on the daily bar charts for live and feeder cattle futures. Measuring implications from these bearish chart patterns suggest significantly more downside price potential in both markets in the near term.
World Weather Inc. today said extreme low temperatures this weekend may slip to the upper single digits and teens in a part of the northern Plains and immediate neighboring areas, especially if light snow accumulates in the region—potentially causing some livestock stress. Low temperatures in the remainder of the northern and central Plains and western Midwest will slip to the teens and 20s, with Sunday coldest in the northern and central Plains and the western Midwest coldest Monday.
USDA reported very light cash cattle trading activity today at an average of $235.00. Last week’s USDA average cash cattle trade was $230.86 versus the week prior’s average of $237.89. The noon report today showed wholesale boxed beef cutout values mixed, with Choice-grade up 31 cents to $377.89, while Select lost $1.14 to $360.11. Movement at midday was 73 loads. The Choice-Select spread is presently $17.78.
Technical analysis: The live and feeder cattle futures bears have the solid overall near-term technical advantage. Prices are still in downtrends on the daily bar charts. The next upside price objective for the live cattle bulls is to close December futures above resistance at $230.00. The next downside technical objective for the bears is closing prices below solid technical support at the October low of $210.00. First resistance is seen at $223.00 and then at $225.00. First support is seen at $218.00 and then at $216.00.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $340.00. The next downside price objective for the bears is to close prices below solid technical support at $300.00. First resistance is seen at $325.00 and then at today’s high of $331.375. First support is seen at $317.00 and then at $315.00.
What to do: Cover your corn-for-feed needs in the cash market through November.
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 November covered in the cash market. Be prepared to make additional purchases if value prices continue.