Hogs
Price action: October lean hog futures fell $1.925 to $79.60, nearer the daily low and hit a 15-month low.
Fundamental analysis: The lean hog futures market saw heavy technical selling pressure, as well as weak long liquidation. The near-term chart posture has quickly changed from price-friendly to outright bearish. A weakening cash hog market is also negative for futures.
The latest CME lean hog index is down 28 cents to $87.94. Tuesday’s projected CME index price is down another 71 cents at $87.23. The national direct five-day rolling average cash hog price quote for today is $87.21. The USDA’s noon pork report today showed cutout value was up $0.25 at $90.05, led by gains in picnics and ribs. Movement at midday was 143.04 loads.
Technical analysis: October lean hog futures have quickly seen the near-term technical posture turn firmly bearish. The next upside price objective for the hog bulls is to close October futures prices above solid chart resistance at the September high of $84.90. The next downside price objective for the bears is closing prices below solid technical support at $75.00. First resistance is seen at today’s high of $81.375 and then at $82.00. First support is seen at $79.00 and then at $78.00.
What to do: Get current with feed coverage.
Hedgers: You currently have all risk in the cash market.
Feed needs: You have corn-for-feed and soymeal needs covered through September in the cash market.Be prepared to make purchases if value prices continue.
Cattle
Price action: October live cattle rose $2.575 to $222.25, nearer the daily high and hit a four-week high. November feeder cattle rose $4.60 to $332.775, nearer the daily high and hit a five-week high.
Fundamental analysis: The live cattle futures market today saw follow-through chart-based buying from last week’s gains that did produce technically bullish weekly high closes on Friday. Higher cash trade last week also supported buying interest in futures.
USDA at midday today reported cash cattle traded at higher money last week, averaging $222.82, up $3.76 from the week prior’s cash trade average of $219.06. The noon report today showed higher boxed beef prices, with Choice grade up $2.71 at $378.65 and Select grade up $1.08 at $354.21. Movement at midday was 48 loads. The Choice-Select spread is presently plus $24.44.
Technical analysis: The next upside price objective for the live cattle bulls is to close October futures above resistance at the August high of $230.325. The next downside technical objective for the bears is closing prices below solid technical support at $214.00. First resistance is seen at $223.00 and then at $224.00. First support is seen at today’s low of $219.90 and then at $218.00.
The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at $345.00. The next downside price objective for the bears is to close prices below solid technical support at $315.00. First resistance is seen at $334.00 and then at $335.00. First support is seen at today’s low of $329.375 and then at $326.00.
What to do: You have corn-for-feed and soymeal needs covered through September in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You have corn-for-feed and soymeal needs covered through September in the cash market.Be prepared to make purchases if value prices continue.