New Advice Alert: Extend feed coverage... We advise livestock producers to cover through January and February for soymeal needs in the cash market. Meal futures have dropped to historically value levels and are well off the November highs. Historically, meal prices do not spend much time at or below the $300.0 level. You now have full coverage in cash through February.
Hogs
Price action: February lean hogs rose 55 cents to $82.425, near mid-range.
Fundamental analysis: Lean hog futures saw some modest technical buying today as the near-term chart posture for the market has turned bullish. Hog traders are also reckoning the cash hog market has put in a seasonal bottom, which is keeping a floor under futures prices.
The latest CME lean hog index is up 5 cents to $81.89. Thursday’s projected cash index price is up 27 cents at $82.16. Today’s national direct 5-day rolling average cash hog price quote was unavailable due to packer submission problems. The noon report today showed pork cutout value up 33 cents to $96.77, led by gains in picnics. Movement at midday was decent at 200.52 loads.
Technical analysis: February lean hog futures bulls have the overall near-term technical advantage as prices are trending up on the daily chart. 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 $83.025 and then at $83.60. First support is seen at $81.50 and then at this week’s low of $80.65.
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 February in the cash market. You are hand-to-mouth for corn-for-feed needs. Be prepared to make additional purchases.
Cattle
Price action: February live cattle rose $1.575 to $228.525, near the daily high and poked to another five-week high. January feeder cattle rose $2.875 to $338.375, near mid-range.
Fundamental analysis: The cattle futures markets today saw more chart-based buying from the speculators, as the near-term technical postures have turned bullish. Both markets are trending higher on the daily charts. Solidly higher cash cattle trade last week and very light trading so far this week at higher money also supported buying interest in the futures markets.
USDA at midday today reported that so far this week very light cash cattle trading has taken place at $222.00. The average cash cattle trade for last week was $221.21. The noon report today showed wholesale boxed beef cutout values lower, with Choice-grade down $2.00 at $359.04, while Select-grade lost $1.60 to $346.43. Movement at midday was decent at 89 loads. The Choice-Select spread is presently $12.61.
In the Northern Plains, snowfall in the next seven days will be significant in Montana, resulting in livestock stress, said World Weather today.
Technical analysis: The live and feeder cattle futures bulls have the near-term technical advantage as prices are trending up on the daily bar charts, to firmly suggest near-term market bottoms are in place and that more price upside is probable in the near term. The next upside price objective for the live cattle bulls is to close February futures above resistance at $233.425, which is the top of a downside price gap on the daily bar chart. The next downside technical objective for the bears is closing prices below solid technical support at $215.00. First resistance is seen at $229.00 and then at $230.00. First support is seen at $2.27 and then at this week’s low of $225.65.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $348.175, which is the top of a downside price gap on the daily bar chart. The next downside price objective for the bears is to close prices below solid technical support at $315.00. First resistance is seen at last week’s high of $340.075 and then at $343.00. First support is seen at this week’s low of $332.75 and then at $330.00.
What to do: Cover soymeal needs through February in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you have full coverage in cash through February. You are hand-to-mouth for corn-for-feed needs. Be prepared to make additional purchases. Be prepared to make additional purchases if value prices continue.