Hogs
Price action: December lean hogs fell $1.725 to $80.625, near the daily low.
Fundamental analysis: Lean hog futures today saw a resumption of chart-based selling. A continued erosion in cash hog prices also emboldened the speculator bears in lean hog futures today. Lower live and feeder cattle futures prices today also spilled over into some selling in hog futures.
The latest CME lean hog index is down another 24 cents at $89.17. Thursday’s projected cash hog index is down 4 cents at $89.13. Today’s national direct 5-day rolling average cash hog price quote is $83.76. The noon report today showed pork cutout value down $1.33 to $96.05, led by losses in cuts across the board. Movement at midday was decent at 234.77 loads.
Technical analysis: December lean hog futures bears have the overall near-term technical advantage. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at $85.00. The next downside price objective for the bears is closing prices below solid technical support at last week’s low of $78.80. First resistance is seen at today’s high of $82.275 and then at this week’s high of $83.25. First support is seen at this week’s low of $80.00 and then at $78.80.
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 $1.925 to $225.275, nearer the daily low. January feeder cattle lost $1.675 to $327.475 and near mid-range.
Fundamental analysis: The live and feeder cattle futures markets today fell victim to some fresh technical selling from the speculators and weaker cash cattle trade so far this week in a very light test. Still, early week price strength begins to suggest near-term market bottoms are in place for cattle futures. However, the live and feeder cattle futures markets need to close out this week with prices nearer their weekly highs to better suggest near-term market bottoms are in place.
Cash cattle trading this week has been very light so far, with USDA at midday today reporting the average steer price at $227.11 and the average heifer price at $227.32. USDA Monday reported cash cattle trading activity last week occurred at an average of $228.70. That’s down $2.16 from the week prior’s USDA average cash cattle trade of $230.86. The noon report today showed wholesale boxed beef cutout values mixed, with Choice-grade down $3.24 to $375.98, while Select rose $2.01 to $362.09. Movement at midday was good at 105 loads. The Choice-Select spread is presently $13.89.
Technical analysis: The live and feeder cattle futures bears have the overall near-term technical advantage. However, the early week price gains begin to suggest near-term market bottoms are in place. But right now 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 $235.00. The next downside technical objective for the bears is closing prices below solid technical support at last week’s low of $219.075. First resistance is seen at today’s high of $228.325 and then at $230.00. First support is seen at $224.00 and then at $222.00.
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 last week’s low of $311.40. First resistance is seen at today’s high of $330.925 and then at this week’s high of $333.475. First support is seen at today’s low of $324.35 and then at $320.00.
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.