Hogs
Price action: December lean hogs fell 5 cents to $80.775, near the daily low and closed at a three-month low close.
Fundamental analysis: The lean hog futures market bulls worked to stabilize prices today following the recent selling pressure that saw lower closes in December futures for five sessions in a row. Firmly bearish technicals and steadily declining cash hog prices are limiting buying interest in the hog futures market. December lean hog futures’ discount to the cash index has somewhat limited selling interest in futures recently.
The latest CME lean hog index is down another 24 cents at $92.03. Thursday’s projected cash hog index is down another 17 cents at $91.86. Today’s national direct 5-day rolling average cash hog price quote is $87.90. The noon report today showed pork cutout value up $1.28 to $101.30. Movement at midday was decent at 184.92 loads.
Technical analysis: 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 $4.325 to $230.90 and near mid-range. January feeder cattle gained $9.15 to $334.025 and nearer the daily high.
Fundamental analysis: The live cattle futures markets today saw strong corrective rebounds after the recent steep price downdrafts. Today’s price action begins to suggest this week’s lows are near- term market bottoms. Steady to higher price action the rest of this week would better suggest the live and feeder cattle futures markets have quickly put in price bottoms after suffering five-session beat-downs.
Mexican Agriculture Minister Julio Berdegue said earlier today that Mexico and the U.S. have not yet set a date to resume Mexican cattle exports. Berdegue spoke with U.S. Ag Secretary Brooke Rollins in a video conference and agreed to test modular mobile plants in Mexico that could increase sterile fly production.
USDA has reported active cash cattle trading at mid-week. The agency at midday today reported cash trade has averaged at $229.70 versus last week’s average of $237.89. The noon report today showed wholesale boxed beef cutout values higher, with Choice-grade up $2.48 to $382.13, while Select rose $1.28 to $361.28. Movement at midday was decent at 89 loads. The Choice-Select spread is presently $20.85.
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. However, today’s price action begins to suggest near-term price bottoms are in place. 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 today’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 $330.00 and then at today’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.