Livestock Analysis | February 13, 2024
Price action: April lean hogs fell 5 cents to $81.075 and settled near mid-range.
Fundamental analysis: The lean hog futures market today saw limited buying interest due to a “risk-off” day in the general marketplace following a warmer-than-expected consumer price index report for January. Still, hog futures bulls this week have worked to stabilize prices after last week’s downdraft. The bulls need to defend and keep April futures prices above last week’s low to keep the near-term chart advantage. The still up-trending cattle futures markets that this week hit three-month highs are working in favor of the hog futures bulls.
The latest CME lean hog index is up 10 cents to $73.70 (as of Feb. 9). The projected cash index for Wednesday is up 41 cents at $74.11. The national direct five-day rolling average cash hog price today is $66.21. The noon report showed pork cutout value down $1.29 to $87.25 on losses in loins, hams and bellies. Movement at midday was decent at 211.13 loads.
Technical analysis: The lean hog futures bulls have the slight overall near-term technical advantage but need to show fresh power soon to keep it. A four-week-old uptrend on the daily bar chart is in jeopardy. The next upside price objective for the hog bulls is to close April prices above solid chart resistance at the January high of $85.925. The next downside price objective for the bears is closing prices below solid technical support at $77.50. First resistance is seen at this week’s high of $81.725 and then at $83.00. First support is seen at last week’s low of $79.675 and then at $78.00.
What to do: Get current with feed advice. Carry all production risk in the cash market for now.
Hedgers: Carry all risk in the cash market for now.
Feed needs: You have all corn-for-feed and soybean meal needs covered in the cash market through February.
Price action: April live cattle futures dropped 82.5 cents to $185.10, while nearby February futures slid 50 cents to $183.75. March feeder futures slipped 82.5 cents to $248.00.
Fundamental analysis: Cattle futures continued to face profit-taking, though losses remain minimal as prices continue to grind higher on the daily bar chart. Cash cattle trade has yet to take place this week and will likely be pushed into the latter half of the week once again. Packers purchased a significant amount of cattle late in the week last week and are delaying negotiations as margins remain in the red. Cash cattle prices have rallied to the highest level since Nov. 3 of last year after rising for four consecutive weeks. Last week’s surge in cash cattle prices made up over 40% of the rally seen in the last four-week, further pressuring packer margins into the red. The premium that futures continue to hold to current cattle prices could limit gains, especially in nearby contracts, though the uptrend remains firmly in place in futures. Wholesale beef prices slipped at midsession as Choice cutout fell 83 cents to $293.25, while Select dropped 7 cents to $286.95, bringing the Choice/Select spread to a narrow $6.30.
Feeder futures were not immune to selling pressure today and still face relative weakness when compared to fats. Premiums to the feeder cattle index continue to limit gains, especially in nearby futures. Premiums in deferred futures continue to price in records for the feeder cattle index later this year.
Technical analysis: March live cattle futures fell for the second consecutive session on profit taking, though bulls still maintain full control of the technical advantage. Bulls are seeking to overcome resistance at $185.90, which attracted a significant amount of volume over the last week. Further resistance stands at $186.725, then $187.575. Meanwhile, support stands at $184.35, the 10-day moving average, $183.75, with significant backing from $181.75.
March feeder futures continue to grind higher on the daily bar chart, rendering the technical advantage to the bulls. Bulls are seeking to overcome resistance at $248.825 then Monday’s for-the-move high at $249.90, coinciding with psychological $250.00 resistance. Support stands at $247.25 with further backing at $245.15, the 10-day moving average.
What to do: Get current with feed advice. All production risk in the cash market for now but be prepared for some hedge coverage as we have demand concerns.
Hedgers: Carry all risk in the cash market for now.
Feed needs: You have all corn-for-feed and soybean meal needs covered in the cash market through February.
