Hogs
Price action: December lean hogs fell 67 1/2 cents to $79.925, nearer the daily low and hit a 3.5-month low.
Fundamental analysis: The lean hog futures market today saw still more technical selling amid bearish near-term price charts that include a price downtrend in place for December hogs. Steadily falling cash hog prices are also bearish for lean hog futures. Bulls are getting little help from December hog futures’ discount to the cash index.
The latest CME lean hog index is down another 21 cents at $90.98. Wednesday’s projected cash hog index is down another 8 cents at $90.90. Today’s national direct 5-day rolling average cash hog price quote is $83.90. (That may be a mistake by USDA, given its large drop from Monday’s quote of $87.72.) The noon report today showed pork cutout value down $2.33 to $99.32, led by a decline in picnics. Movement at midday was decent 194.84 loads.
Technical analysis: December lean hog futures bears have the firm overall near-term technical advantage. Prices are in a steep five-week-old 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 $83.00. 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 this week’s high of $81.725 and then at $83.00. First support is seen at $79.00 and then at $78.00.
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 $4.425 to $227.775 and near the daily low. January feeder cattle lost $7.30 to $329.225 and near the daily low.
Fundamental analysis: The live and feeder cattle futures markets today saw technical selling pressure and also saw better selling interest amid the U.S. stock market sell off and keener risk aversion in the general marketplace. Bulls are still worried about bearish pennant patterns that have formed on the daily bar charts for live and feeder cattle futures. Today’s price action saw bearish downside breakouts from the pennants in December live cattle and January feeder cattle.
Ag Secretary Brooke Rollins confirmed the U.S. is not ready to reopen its border to Mexican cattle amid the New World Screwworm outbreak. However, she did note that President Trump is “very focused” on reopening the border, which has been largely closed since May.
USDA reported no cash cattle trading activity so far this week. The agency Monday reported last week’s average cash cattle trade was $230.86 versus the week prior’s average of $237.89. The noon report today showed wholesale boxed beef cutout values mixed, with Choice-grade down $1.61 to $377.64, while Select gained $3.17 to $363.10. Movement at midday was solid at 107 loads. The Choice-Select spread is presently $14.54.
Technical analysis: The live and feeder cattle futures bears have the overall near-term technical advantage and gained more power today. Prices are still 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 $235.00. The next downside technical objective for the bears is closing prices below solid technical support at the October low of $223.175. First resistance is seen at $230.00 and then at today’s high of $232.974. First support is seen at $227.00 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 the October low of $320.675. First resistance is seen at $334.00 and then at today’s high of $339.975. First support is seen at $328.00 and then at $325.00.
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.