Hogs
Price action: February lean hogs rose 82 1/2 cents to $81.00, nearer the session high.
Fundamental analysis: Lean hog futures today saw some short covering following losses on Monday and Tuesday. The overall chart posture for the hog futures market remains bearish, which will likely limit speculator buying interest in the near term. More solid gains in the cattle futures markets today also supported buying in the hog futures. Steadily falling cash hog prices have constrained lean hog futures bulls. Until the cash hog market stabilizes and starts to turn back up, buyers in futures will remain timid. However, daily losses in the cash and CME lean hog index have begun to get smaller.
The latest CME lean hog index is down another 6 cents to $81.61. Thursday’s projected cash index price is up 6 cents at $81.67. Today’s national direct 5-day rolling average cash hog price quote is $69.36. The noon report today showed pork cutout value up 47 cents to $94.69, led by gains in bellies. Movement at midday was 172.37 loads.
Technical analysis: February lean hog futures bears have the overall near-term technical advantage. However, a price downtrend on the daily bar chart has stalled out. The next upside price objective for the hog bulls is to close February futures prices above solid chart resistance at the November high of $83.60. The next downside price objective for the bears is closing prices below solid technical support at the November low of $77.125. First resistance is seen at last week’s high of $82.275 and then at $83.60. First support is seen at this week’s low of $79.60 and then at $78.60.
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: February live cattle rose $1.10 to $221.90, nearer the daily high and closed at a three-week high close. January feeder cattle gained $1.975 to $331.85, nearer the session high and hit a four-week high.
Fundamental analysis: The live and feeder cattle futures markets rallied again today on short covering and perceived bargain hunting. The much-improved near-term technical postures for live and feeder cattle futures markets are also likely inviting the chart-based speculators to more actively play the long sides.
USDA reports very light cash cattle taking place so far this week at solidly higher money, with steers and heifers averaging $215.00--also supported buying interest in cattle futures today. USDA reported last week’s average cash cattle trading price was $211.53, which was down $5.88 from the week prior. The noon report today showed wholesale boxed beef cutout values higher, with Choice-grade up 68 cents at $365.40, while Select-grade rose $2.31 to $353.09. Movement at midday was 79 loads. The Choice-Select spread is presently $12.31.
Technical analysis: The live and feeder cattle futures bulls are making good technical progress this week, to firmly suggest near-term market bottoms are in place and that prices can now potentially begin to work sideways to higher. The next upside price objective for the live cattle bulls is to close February futures above resistance at $232.50. The next downside technical objective for the bears is closing prices below solid technical support at the November low of $204.325. First resistance is seen at $224.00 and then at $225.00. First support is seen at today’s low of $219.625 and then at Tuesday’s low of $217.05.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $348.175. The next downside price objective for the bears is to close prices below solid technical support at the November low of $299.525. First resistance is seen at $335.00 and then at $340.00. First support is seen at today’s low of $327.725 and then at Tuesday’s low of $322.75.
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.