Hogs
Price action: December lean hog futures rose $0.225 to $56.025, near the daily high.
Fundamental analysis: The lean hog futures market saw more tepid short covering and perceived bargain hunting today after the market slumped to contract lows last week. Buying interest in lean hog futures continues to be constrained by cash hog prices and the CME cash index continuing to trend lower. However, there are early internal signs that the CME lean hog index may have, or be close to, bottoming out.
The latest CME lean hog index is down $0.29 to $59.99. Thursday’s projected CME index price is down $0.21 at $59.78. The national direct five-day rolling average cash hog price quote for today is $40.87. The USDA noon pork report today showed cutout value was up $0.23 at $69.75, led by gains in butts. Movement at midday was decent at 196.88 loads.
Technical analysis: December lean hog futures see a price downtrend in place on the daily chart. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at $60.00. The next downside price objective for the bears is closing prices below solid technical support at the contract low of $53.175. First resistance is seen at $57.10 and then at $58.00. First support is seen at today’s low of $55.00 and then at $54.00.
What to do: Get current with feed coverage.
Hedgers: You currently have all risk in the cash market.
Feed needs: You are covered through the end of December for corn-for-feed and covered through November for soymeal for feed needs. Be prepared to make purchases if value prices arise from fall harvest pressure.
Cattle
Price action: December live cattle fell $0.225 to $218.975, near mid-range. January feeder cattle gained $1.125 to $327.80, near mid-range.
Fundamental analysis: The live cattle futures market saw some corrective selling pressure from recent good gains. Feeder futures saw more short covering and perceived bargain buying today. Futures price action the past three sessions suggests the bears are exhausted and that a market bottoms may be in place.
USDA at midday today reported no cash trading yet this week. Last week’s cash cattle average price was $215.43, down over $8 from the week prior. The noon report today showed lower boxed beef prices, with Choice grade down $2.38 at $360.60 and Select grade down $2.21 at $349.41. Movement at midday was 55 loads. The Choice-Select spread is presently plus $11.19.
More than 40 cases of screwworm have been confirmed so far in November, already making it the worst month since the pest first appeared in Texas earlier this year, according to the US Department of Agriculture. The New World screwworm has made a comeback in the U.S. after months of relatively muted cases, thanks in large part to milder temperatures and humidity, notes Bloomberg.
Technical analysis: December live cattle and November feeders see price downtrends on their daily charts in serious jeopardy. Recent price action suggests the bears have become exhausted and that near-term market bottoms are in place. The next upside price objective for the live cattle bulls is to close December futures above resistance at $225.00. The next downside technical objective for the bears is closing prices below solid technical support at last week’s low of $210.85. First resistance is seen at $220.00 and then at $222.00. First support is seen at $216.00 and then at this week’s low of $214.70.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at last week’s high of $334.675. The next downside price objective for the bears is to close prices below solid technical support at last week’s low of $312.05. First resistance is seen at today’s high of $330.125 and then at $334.675. First support is seen at $323.50 and then at this week’s low of $319.525.
What to do: You are covered through the end of December for corn-for-feed, and are hand to mouth for soymeal for feed needs. Be prepared to make purchases if value prices arise from fall harvest pressure.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You are covered through the end of December for corn-for-feed and covered through November for soymeal for feed needs. Be prepared to make purchases if value prices arise from fall harvest pressure.