Livestock Analysis | December 16, 2021

( )

Hogs

Price action: Cash and wholesale prices supported hog futures, with nearby February lean hogs gaining $1.025 to $80.35.

Fundamental analysis: The CME lean hog index continues inching higher, with tomorrow’s preliminary figure rising another 11 cents to $72.41, the highest since Nov. 24. Also, despite widespread anticipation of a seasonal breakdown in ham prices, primal ham values surged $9.46 early today, helping lift pork cutout values $2.09 to $88.73.

This week’s hog slaughter will likely mark the high for 2021, since packers will try to boost weekend kills as much as possible because of holiday closures over the next two weeks. A mid-December supply surge combined with weaker prices as retailers complete holiday purchases generally pushes hog and pork prices to among the lowest levels of the year. Conversely, demand for other pork cuts, particularly loins and bellies, tends to improve as the industry looks ahead to winter activity. That strength, along with seasonal reductions in hog supplies, routinely powers a seasonal hog rally into mid-February. The USDA’s indication that winter 2021-22 hog numbers could fall 6.0% under comparable year-ago numbers suggests the early-year rally could be exaggerated.

Technical analysis: The technical situation in February hog futures seems balanced between bullish and bearish interests. Bears pushed yesterday’s close below the contract’s 40-day moving average around $79.65 but couldn’t force a close below the contract’s 10-day moving average at $79.15. February opened near the 40-day moving average today and closed above that level, but bulls couldn’t shove it above the 20-day moving average at $80.59. Look for additional support below the 10- and 40-day moving averages at yesterday’s low of $78.675, then at the Dec. 8 low of $75.35. A push above the 20-day moving would have bulls targeting recent highs at $82.70 and $84.675.

What to do: Get current with feed advice.

Hedgers: You currently have all risk in the cash market.

Feed needs: You should have all soybean meal needs covered in the cash market through December. You are still hand-to-mouth on corn-for-feed needs.

 

Cattle

Price action: February live cattle rose 47.5 cents to $137.05, after earlier dropping as low as $135.80, the contract’s lowest intraday price since $135.50 on Nov. 15.

Fundamental analysis: Live cattle futures fell to four-week lows early today before rebounding to ended mixed as wholesale beef prices firmed, suggesting prices may have dropped far enough to stir increased retail buying interest. Choice cutout values early today rose $3.28 to $263.54 on movement of 76 loads by midday. Cutout values have been on a protracted slide, reaching an eight-month low yesterday, as high retail prices crimped consumer demand. Feeder cattle futures were pressured by strength in corn prices.

Live cattle futures are still on track to close lower for the third consecutive week amid signs the cash market peaked earlier this month. Cash cattle this week have traded around $2 lower than last week’s average of $139.69 and likely will continue slipping given packers’ abbreviated slaughter schedules the last two weeks of the year. At least three major beef plants in the Southern Plains closed their second shifts yesterday due to high winds, which will reduce expected slaughter levels this week.

Early today, USDA reported net weekly U.S. beef export sales at 17,100 MT, up “noticeably” from the previous week but down 3.0% from the prior four-week average, USDA reported. Accumulated exports so far this year, at 875.6 MMT, are still running almost 10% above the same period last year.

Technical analysis: Live cattle’s technical posture has turned increasingly bearish, at least over the short term, with the recent breaking of a two-month uptrend on the daily bar chart. February futures today briefly fell below the 50-moving average around $136.10, before recovering. The contract hasn’t closed below the 50-day MA since early November. The next downside objective for market bears is closing February futures below solid support at $134.00. First resistance is seen at today’s high of $137.35, then at this week’s high of $139.275. First support is seen at $136.00, then at $135.00.

What to do: Short-term protective hedges for fed cattle producers may be needed if recent lows are violated.

Hedgers: Carry all risk in the cash market for now.

Feed needs: You should have all soybean meal needs covered in the cash market through December. You are still hand-to-mouth on corn-for-feed needs.

 

Latest News

H&P Report negative compared to pre-report expectations
H&P Report negative compared to pre-report expectations

Nearly every category topped the average pre-report estimates.

After the Bell | March 28, 2024
After the Bell | March 28, 2024

After the Bell | March 28, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

PF Report Reaction: Bullish USDA data for corn
PF Report Reaction: Bullish USDA data for corn

Corn planting intentions and March 1 stocks came in lower than expected.

Report Snapshot: USDA shows lighter-than-expected corn acres and stocks
Report Snapshot: USDA shows lighter-than-expected corn acres and stocks

USDA reported corn acres of 90.036 million acres for 2024 and March 1 stocks of 8.347 billion bu., both well below trade estimates. Soybean acres were slightly lower than expectations, while stocks were higher.