Hogs
Price action: December lean hog futures fell $3.425 to $58.60, near the daily low and careened to another contract low.
Fundamental analysis: The lean hog futures market saw more heavy technical selling today. Near-term charts remain firmly bearish. A price downtrend remains in place on the daily bar chart. However, the hog futures market is now short-term oversold and due for at least a corrective bounce. Also, this week’s price downside moves are a “washout” that suggests, from a time perspective, a market bottom is close at hand in December futures. Cash hog market and CME cash index prices continue to trend lower. Solid losses in the cattle futures markets today also weighed on hogs.
The latest CME lean hog index is down $0.70 to $69.36. Thursday’s projected CME index price is down $1.06 at $68.30. The national direct five-day rolling average cash hog price quote for today is $59.40. The USDA noon pork report today showed cutout value was up $3.11 at $76.20, led by gains in bellies. Movement at midday was decent at 190.70 loads.
Technical analysis: December lean hog futures see the technical posture as firmly bearish amid a price downtrend in place on the daily chart. However, the market is very short-term oversold and due for at least a corrective rebound. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at $65.00. The next downside price objective for the bears is closing prices below solid technical support at $55.00. First resistance is seen at $60.00 and then at $61.00. First support is seen at $58.00 and then at $57.00.
What to do: Get current with feed coverage.
Hedgers: You currently have all risk in the cash market.
Feed needs: You have corn-for-feed needs covered through the end of December, and are hand to mouth for soymeal for feed needs. Be prepared to make purchases if value prices arise from fall harvest pressure.
Cattle
Price action: December live cattle fell $3.525 to $227.325, near the daily low and hit a two-week low. November feeder cattle lost $3.275 to $346.75, near the daily low and hit a 3.5-month high early on.
Fundamental analysis: The live and feeder cattle futures markets today saw what is so far routine profit-taking pressure, following recent gains. However, bulls do not want to see good follow-through selling on Thursday or Friday, which would begin to suggest the bulls are near-term exhausted and that near-term market tops are in place. Sharp losses in lean hog futures today also spilled over into selling in the cattle futures markets.
USDA at midday today reported very light cash cattle trading at mid-week, averaging $228.40. The agency Monday said cash cattle trading last week averaged $227.06, which was up nearly $3 from the week prior. The noon report today showed lower boxed beef prices, with Choice grade down $2.51 at $369.71 and Select grade down $1.71 at $357.14. Movement at midday was decent at 72 loads. The Choice-Select spread is presently plus $12.57.
Technical analysis: December live cattle and November feeders bulls still have the near-term technical advantage and are seeing prices trending up on their daily 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 $225.00. First resistance is seen at $2.30 and then at today’s high of $231.25. First support is seen at $226.00 and then at $225.00.
The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at $360.00. The next downside price objective for the bears is to close prices below solid technical support at $335.00. First resistance is seen at today’s high of $351.30 and then at $353.00. First support is seen at $345.00 and then at $342.575.
What to do: You are covered through the end of December for corn-for-feed, and are hand to mouth for soymeal for feed needs. Be prepared to make purchases if value prices arise from fall harvest pressure.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You are covered through the end of December for corn-for-feed, and are hand to mouth for soymeal for feed needs. Be prepared to make purchases if value prices arise from fall harvest pressure.