Hogs
Price action: December lean hogs fell 67 1/2 cents to $77.90, near the daily low and hit a six-month-low.
Fundamental analysis: Lean hog futures market today saw more technical selling pressure amid the near-term price downtrend that is firmly in place. Steadily falling cash hog prices and declining pork cutout values are also prompting selling pressure in lean hog futures, despite the futures’ discounts to the cash market.
The latest CME lean hog index is down another 94 cents at $87.00. Wednesday’s projected cash hog index is down 33 cents at $86.67. Today’s national direct 5-day rolling average cash hog price quote is $77.31. The noon report today showed pork cutout value down 94 cents to $96.07, led by losses in hams. Movement at midday was decent at 208.12 loads.
Technical analysis: December lean hog futures bears have the firm overall near-term technical advantage. A price downtrend is in place on the daily bar chart and a minor bearish pennant pattern may now be forming. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at last week’s high of $83.25. The next downside price objective for the bears is closing prices below solid technical support at the July low of $77.725. First resistance is seen at today’s high of $79.475 and then at $81.00. First support is seen at $77.00 and then at $76.00.
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 fell $1.25 to $220.025, nearer the daily low. January feeder cattle lost 22 1/2 cents to $326.05 and near mid-range.
Fundamental analysis: The live and feeder cattle futures markets paused today after posting decent gains Monday. The bulls still have some work to do to climb out of their present holes. Keener risk aversion in the general marketplace so far this week limited speculator buying interest in the cattle futures today. Weakening cash cattle prices are also bearish for futures. USDA today reported very light cash cattle trading so far this week, with steers and heifers averaging $221.00. The agency Monday reported last week’s average cash cattle trading price was $225.06, down $3.64 from the week prior. The noon report today showed wholesale boxed beef cutout values mixed, with Choice-grade up $2.87 at $373.28, while Select-grade lost 55 cents to $355.75. Movement at midday was decent at 90 loads. The Choice-Select spread is presently $17.53.
Technical analysis: The live and feeder cattle futures bears still have the overall near-term technical advantage. Prices are in downtrends on the daily bar charts. The next upside price objective for the live cattle bulls is to close December futures above resistance at last week’s high of $229.60. The next downside technical objective for the bears is closing prices below solid technical support at last week’s low of $215.325. First resistance is seen at today’s high of $222.40 and then at $224.00. First support is seen at $218.00 and then at $215.325.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $340.00. The next downside price objective for the bears is to close prices below solid technical support at last week’s low of $310.05. First resistance is seen at $330.00 and then at last week’s high of $333.475. First support is seen at $320.00 and then at this week’s low of $314.525.
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.