Hogs
Price action: December lean hogs rose 62 1/2 cents to $79.475, near the session high.
Fundamental analysis: Lean hog futures market today saw more short covering. However, gains were limited by steadily declining cash hog prices and recently weakening pork cutout values. Lean hog futures’ discount to the cash market also worked in the hog futures bulls’ favor today.
The latest CME lean hog index is down another 40 cents at $86.27. Friday’s projected cash index price is down 56 cents to $85.71. Today’s national direct 5-day rolling average cash hog price quote is $75.29. The noon report today showed pork cutout value up 34 cents to $93.48, led by gains in hams. Movement at midday was 174.44 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. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at the November 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 $80.00 and then at $81.00. First support is seen at this week’s low of $77.50 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 $1.575 to $214.725, nearer the daily low and hit another 4.5-month low. January feeder cattle lost $5.075 to $316.375, nearer the daily low and closed at a four-month low close.
Fundamental analysis: The live and feeder cattle futures markets saw more technical selling pressure today. Weakening cash cattle prices this week also have the speculative bears confident and will to push harder on the short sides of the markets.
USDA today reported more active cash cattle trading so far this week, with steers averaging $218.30 and heifers averaging $219.06. That’s well below last week’s USDA average cash cattle trading price of $225.06. The noon report today showed wholesale boxed beef cutout values mixed again, with Choice-grade down 29 cents at $370.94, while Select-grade gained 29 cents to $353.84. Movement at midday was 70 loads. The Choice-Select spread is presently $17.10.
Cattle futures traders are awaiting Friday afternoon’s USDA monthly cattle-on-feed report. Past months’ COF reports have been bullish, so the cattle futures bulls are hoping for the same on Friday afternoon, in order to help stop the bleeding in futures markets.
Technical analysis: The live and feeder cattle futures bears have the firm 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 this week’s high of $222.40. The next downside technical objective for the bears is closing prices below solid technical support at $206.00. First resistance is seen at today’s high of $217.625 and then at Wednesday’s high of $220.325. First support is seen at today’s low of $212.875 and then at $210.00.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $333.475. 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 today’s high of $323.425 and then at this week’s high of $328.075. First support is seen at $312.00 and then at $310.05.
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.