Hogs
Price action: February lean hogs fell 70 cents to $80.30, near the session low.
Fundamental analysis: Lean hog futures today saw corrective selling pressure from the shorter-term speculators to start the trading week and month, after prices last Friday hit a three-week high. Losses in the cattle futures markets today also limited buying interest in hog futures. Steadily falling cash hog prices will continue to squelch the lean hog futures bulls until the cash hog market stabilizes and starts to turn back up.
The latest CME lean hog index is down another 35 cents to $81.92. Tuesday’s projected cash index price is down another 25 cents at $81.67. Today’s national direct 5-day rolling average cash hog price quote was not available. The noon report today showed pork cutout value up $1.64 to $95.86, led by gains in bellies. Movement at midday was light at 94.21 loads.
Technical analysis: February lean hog futures bears have the overall near-term technical advantage. However, a price downtrend on the daily bar chart is in jeopardy. The next upside price objective for the hog bulls is to close February futures prices above solid chart resistance at the November high of $83.60. The next downside price objective for the bears is closing prices below solid technical support at the November low of $77.125. First resistance is seen at last week’s high of $82.275 and then at $83.60. First support is seen at $80.00 and then at $78.825.
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: February live cattle fell $1.925 to $215.925, nearer the daily low. January feeder cattle lost $2.90 to $321.075, nearer the session low.
Fundamental analysis: The live and feeder cattle futures markets today saw routine corrective price pullbacks following recent good gains. A general risk-off day in the general marketplace today also kept the cattle futures market bulls timid, as did recently declining cash cattle prices.
USDA today reported last week’s average cash cattle trading price was $211.53, which is down $5.88 from the week prior. The noon report today showed wholesale boxed beef cutout values higher, with Choice-grade up $3.83 at $370.65, while Select-grade gained $2.93 to $353.98. Movement at midday was light at 33 loads. The Choice-Select spread is presently $16.67.
World Weather Inc. today reported the past few days that “livestock stress was quite significant across the northern half of the Great Plains and throughout the Midwest as cold rain and heavy snow was accompanied by falling temperatures. Animal stress was quite high in unprotected areas of the Midwest after weeks of unusual warmth and below-normal precipitation.” More cold weather is in store for the Plains states this week, said World Weather.
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. The next upside price objective for the live cattle bulls is to close February futures above resistance at $223.05. The next downside technical objective for the bears is closing prices below solid technical support at the November low of $204.325. First resistance is seen at last week’s high of $219.325 and then at $223.05. First support is seen at $213.00 and then at $210.00.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $328.075. The next downside price objective for the bears is to close prices below solid technical support at the November low of $299.525. First resistance is seen at today’s high of $325.50 and then at $328.075. First support is seen at Friday’s low of $315.15 and then at $310.00.
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.