Hogs
Price action: April lean hog futures fell $1.65 to $93.85, near the session low and hit a three-week low.
Fundamental analysis: Lean hog futures today saw more profit-taking and technical selling pressure from the shorter-term traders. A rare and bearish broadening pattern on the daily chart for April hogs emboldened the chart-based bears to play the short side today.
The latest CME lean hog index is down 14 cents at $86.32. Thursday’s projected cash index price is up 20 cents at $86.52. The national direct five-day rolling average cash hog price quote today is $65.41. The noon report today showed pork cutout value down $1.01 at $94.45, led by losses in ribs. Movement at midday was 170.57 loads.
Technical analysis: April lean hog futures bulls are fading. A price uptrend on the daily bar chart has been negated and a rare and bearish broadening pattern has formed, to suggest a market top is in place. The next upside price objective for the hog bulls is to close April futures prices above solid chart resistance at $97.875, which is the top of a downside price gap on the daily bar chart. The next downside price objective for the bears is closing prices below solid technical support at $90.00. First resistance is seen at $96.00 and then at this week’s high of $97.625. First support is seen at $94.00 and then at $93.00.
What to do: Get current with feed coverage.
Hedgers: You have 50% of Q2 production hedged with all remaining risk in the cash market.
Feed needs: You should have all your soymeal needs covered through March in the cash market. You should also have corn-for-feed needs purchased through March. Be prepared to make additional purchases.
Cattle
Price action: April live cattle rose $3.55 to $240.975, near the daily high. March feeder cattle gained $2.675 to $367.45, nearer the session high.
Fundamental analysis: The cattle futures markets bulls needed to show strength after fading a bit, and they did just that today, to regain some momentum. Some improved trader/investor risk appetite in the general marketplace this week has worked in favor of the cattle market bulls. Today’s much-stronger-than-expected U.S. jobs report suggests consumer confidence will remain high—meaning still-solid demand for beef at the meat counter.
USDA again today reported no active cash cattle trading so far this week, but it will likely pick on this afternoon or Thursday. Cash trading last week averaged $241.31, up $1.87 from prior week’s average cash cattle trade at $239.44. The noon report today showed wholesale boxed beef cutout values mixed again. Choice-grade was down 41 cents at $367.14, while Select-grade rose $1.19 to $364.09. Movement at midday was 53 loads. The Choice-Select spread at midday today was plus $3.05.
Technical analysis: The live and feeder cattle futures bulls have the overall near-term technical advantage amid price uptrends in place on the daily bar charts, and gained fresh strength today. The next upside price objective for the live cattle bulls is to close April futures above resistance at the contract high of $250.925. The next downside technical objective for the bears is closing prices below solid technical support at the January low of $231.275. First resistance is seen at $241.325 and then at $242.50. First support is seen at $239.00 and then at this week’s low of $237.00.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at the contract high of $378.60. The next downside price objective for the bears is to close prices below solid technical support at $353.00. First resistance is seen at this week’s high of $369.80 and then at the February high of $373.60. First support is seen at this week’s low of $364.075 and then at $362.00.
What to do: Cover corn-for-feed needs through March 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 March. You have corn-for-feed needs covered through March as well. Be prepared to make additional purchases if value prices continue.