Hogs
Price action: February lean hogs rose $1.125 to $84.125, near mid-range.
Fundamental analysis: Lean hog futures rebounded today on some perceived bargain hunting and more technical buying. Rising cash hog prices and a bullish near-term chart posture for the futures market will likely continue to support buying interest in lean hog futures. The February futures contract today poked back above the latest CME lean hog index, which is also a positive.
The latest CME lean hog index is up 57 cents to $83.87. Friday’s projected cash index price is up another 1 cent at $83.88. Today’s national direct 5-day rolling average cash hog price quote is $70.20. The noon report today showed pork cutout value up $2.18 at $100.72, led by gains in hams and ribs. Movement at midday was light at 98.45 loads.
Hog traders are awaiting the quarterly USDA hogs and pigs report next Tuesday afternoon, which is expected to show a decline in inventories and kept for breeding numbers.
Technical analysis: February lean hog futures bulls have the overall near-term technical advantage. 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 $87.00. The next downside price objective for the bears is closing prices below solid technical support at last week’s low of $80.65. First resistance is seen at today’s high of $84.525 and then at last week’s high of $85.075. First support is seen at this week’s low of $82.40 and then at $81.00.
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 February in the cash market. You should also have corn-for-feed needs purchased through February. Be prepared to make additional purchases.
Cattle
Price action: February live cattle fell $1.15 to $228.40, near mid-range. January feeder cattle fell $1.25 to $340.275, nearer the daily high.
Fundamental analysis: The live and feeder cattle futures markets saw more profit taking today as the bulls are fading a bit late this week and do not want to see technically bearish weekly low closes on Friday that would begin to suggest near-term market tops are in place. Higher cash cattle trade so far week, following last week’s solid gains, should work to limit further seller interest in the cattle futures on Friday.
USDA at midday today reported light cash cattle trading, with steers averaging $228.22 and heifers $229.28. The noon report today showed wholesale boxed beef cutout values mixed with Choice-grade up 95 cents at $357.04, while Select-grade fell $2.38 to $344.05. Movement at midday was light at 46 loads. The Choice-Select spread is $12.99.
In the Northern Plains, blizzard conditions will occur in central and eastern production areas today due to some snow and more very strong winds. Livestock stress is expected as a result.
Cattle futures traders are looking ahead to Friday afternoon’s USDA monthly cattle-on-feed report. A Reuters survey showed analysts, on average expect cattle on feed as of Dec. 1 at 98.4 percent from the same time last year, at 11.79 million. Placements in November are seen at 92% of last year, at 1.652 million head. Marketings in November are seen at 88.7% from last year at the same time, at 1.530 million head. The report comes out at 2:00 p.m. CST.
Technical analysis: The live and feeder cattle futures bulls have the overall near-term technical advantage but have faded a bit late this week. Price uptrends have stalled out and bulls need to show fresh power very soon to keep them alive. The next upside price objective for the live cattle bulls is to close February futures above resistance at the December high of $231.775. The next downside technical objective for the bears is closing prices below solid technical support at $225.00. First resistance is seen at today’s high of $229.675 and then at $231.775. First support is seen at today’s low of $226.85 and then at last 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 $330.00. First resistance is seen at last week’s high of $345.25 and then at $348.175. First support is seen at today’s low of $3337.00 and then at $335.00.
What to do: Cover corn-for-feed needs through February in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.