Hogs
Price action: December lean hog futures rose $2.35 to $55.875, nearer the daily high.
Fundamental analysis: The lean hog futures market saw short covering and perceived bargain hunting today after the market careened to contract lows last week. A big rebound in the U.S. stock market today and better risk appetite in the general marketplace also supported buying interest in hog futures. Cash hog prices and the CME cash index continue to trend lower, however.
The latest CME lean hog index is down $1.29 to $60.28. Tuesday’s projected CME index price is down $1.29 at $60.28. The national direct five-day rolling average cash hog price quote for today is $45.23. The USDA noon pork report today showed cutout value was up $0.92 at $71.57, led by gains in ribs. Movement at midday was 176.26 loads.
Technical analysis: December lean hog futures see an accelerating price downtrend in place on the daily chart. However, strong gains on Tuesday would begin to suggest a market bottom is in place. 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 $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 rose $2.15 to $216.20, near mid-range after hitting an 11-month low on Friday. January feeder cattle rallied $5.80 to $324.175, nearer the daily high after hitting a six-week low on Friday.
Fundamental analysis: The cattle futures markets saw short covering and perceived bargain buying today after the recent two-week downdraft in prices. A solid rebound in the U.S. stock indexes to start the trading week was also a positive for the cattle futures markets, after the stock indexes melted down the past two weeks. USDA reporting sharply lower cash cattle trading near midday did take some wind out of the bulls’ sails as futures prices backed well down from daily highs.
USDA at midday today reported cash trading last week averaged $215.43, down over $8 from the week prior’s reported cash cattle trading average of $223.65. The noon report today showed mixed boxed beef prices, with Choice grade up $1.61 at $362.40 and Select grade down $1.07 at $352.49. Movement at midday was light at 36 loads. The Choice-Select spread is presently plus $9.91.
Technical analysis: December live cattle and November feeders see price downtrends in place on their daily charts. However, price action the past two trading sessions 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 today’s high of $218.95 and then at $220.00. First support is seen at today’s low of $214.70 and then at $213.00.
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 $327.35 and then at $330.00. First support is seen at today’s low of $319.525 and then at $317.00.
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.