Hogs
Price action: December lean hogs rose 5 cents to $80.825, near mid-range and hit a three-month low early on.
Fundamental analysis: The lean hog futures market saw tepid short covering today as the bulls work to stabilize prices following the recent selling pressure. Still, overall bearish price charts and steadily falling cash hog prices will likely continue to limit buying interest in the hog futures market. December hog futures still have a discount to the cash index, which may work to limit selling interest in futures.
The latest CME lean hog index is down another 17 cents at $91.86. Friday’s projected cash hog index is down another 33 cents at $91.53. Today’s national direct 5-day rolling average cash hog price quote is $87.99. The noon report today showed pork cutout value up 7 cents to $100.31. Movement at midday was 163.68 loads.
Technical analysis: Not much new lately. December lean hog futures bears have the firm overall near-term technical advantage. Prices are in a steep downtrend on the daily bar chart. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at $84.00. The next downside price objective for the bears is closing prices below solid technical support at $80.00. First resistance is seen at this week’s high of $82.575 and then at last week’s high of $84.05. First support is seen at $80.00 and then at $79.00.
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 rose 20 cents to $231.10 and near mid-range. January feeder cattle gained 20 cents to $334.225 and near mid-range.
Fundamental analysis: The live cattle futures markets today saw pauses after the recent steep price downdrafts. While Wednesday’s and today’s price action begin to suggest this week’s lows are near- term market bottoms, bulls are worried that bearish pennant patterns are forming on the daily bar charts.
USDA today reported active cash cattle trading so far this week, averaging $229.70 versus last week’s average of $237.89. The noon report today showed wholesale boxed beef cutout values lower, with Choice-grade down $3.29 to $378.09, while Select dropped $2.20 to $359.59. Movement at midday was decent at 70 loads. The Choice-Select spread is presently $18.50.
Technical analysis: The live and feeder cattle futures bears still have the overall near-term technical advantage. Prices are still in downtrends on the daily bar charts. And while the past two days’ price action begins to suggest near-term price bottoms are in place, there is also the specter of bearish pennant patterns forming on the daily bar chart. The next upside price objective for the live cattle bulls is to close December futures above resistance at $238.00. The next downside technical objective for the bears is closing prices below solid technical support at this week’s low of $223.175. First resistance is seen at this week’s high of $234.075 and then at $236.00. First support is seen at Wednesday’s low of $227.55 and then at $225.00.
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 chart. The next downside price objective for the bears is to close prices below solid technical support at this week’s low of $320.675. First resistance is seen at this week’s high of $340.50 and then at $344.00. First support is seen at today’s low of $329.30 and then at Wednesday’s low of $326.725.
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.