Hogs
Price action: October lean hogs rose 97 1/2 cents to $96.125, nearer the daily high.
Fundamental analysis: Today’s gains in the lean hog futures market were especially impressive given the big losses in the cattle futures markets. Technical buying was featured again today amid the firmly bullish near-term chart posture for October hogs.
The latest CME lean hog index is down 1 cent to $105.91 as of Sept. 5. Wednesday’s projected cash hog index is down 4 cents to $105.87. Today’s national direct 5-day rolling average cash hog price quote is $105.94. The noon report today showed pork cutout value fell 81 cents to $115.57, led by declines in bellies. Movement at midday was 179.87 loads.
Technical analysis: Lean hog futures bulls have the solid overall near-term technical advantage. A choppy, seven-week-old price uptrend is in place on the daily bar chart. The next upside price objective for the hog bulls is to close October futures prices above solid chart resistance at the contract high of $97.05. The next downside price objective for the bears is closing prices below solid technical support at $91.00. First resistance is seen at today’s high of $96.40 and then at $97.05. First support is seen at $95.00 and then at last week’s low of $93.75
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 September in the cash market, with half coverage for October, November and December. For corn, you now have all needs through October covered in the cash market.
Cattle
Price action: October live cattle fell $5.625 to $230.175, near the daily low and hit a three-week low. September feeder cattle closed down the daily limit of $9.25 to $351.70 and hit a three-week low. With today’s limit-down move in September feeders, trading limits in both cattle futures markets will be expanded Wednesday, with the daily limit being $13.75 in feeder cattle and $10.75 in live cattle futures.
Fundamental analysis: Heavy profit-taking pressure and weak long liquidation were featured today in the cattle futures markets. The old trading adage says a strong bull market needs to be fed fresh, bullish fundamental news often to continue on, and such has been lacking in the cattle markets recently. The only fresh fundamental news that may have negatively impacted the cattle futures markets today was the revised U.S. jobs growth numbers for the year ended in March–down 911,000 for the year, which about cuts in half the monthly jobs–growth rate for the 12-month period ending in March–from 147,000 to just over 70,000 a month. Those revised numbers could sap U.S. consumer confidence.
Price uptrends on the daily charts were at least temporarily negated today to begin to suggest market tops are finally in place. Follow-through selling pressure on Wednesday would be a stronger clue that market tops are in place. Keep in mind that the cattle futures market bulls have shown keen resilience the past few months. However, this seems like an extra steep hole for the bulls to climb out.
There has been no cash cattle trading reported by USDA so far this week. USDA Monday reported last week’s cash cattle trade averaged $242.55, which compares to $243.60 the week prior. The noon report today showed wholesale boxed beef cutout values mixed, with Choice down 10 cents to $409.59, while Select gained $2.99 to $388.33. Movement at midday was decent at 89 loads. The Choice-Select spread is presently $21.26.
Technical analysis: Live and feeder cattle futures bulls still have the overall near-term technical advantage but faded badly today. Nine-week-old price uptrends on the daily bar charts have been at least temporarily negated. The next upside price objective for the live cattle bulls is to close October futures above resistance at this week’s high of $236.875. The next downside technical objective for the bears is closing prices below solid technical support at $222.50. First resistance is seen at $232.00 and then at $234.00. First support is seen at $230.00 and then at $228.00.
The next upside price objective for the feeder bulls is to close September futures prices above technical resistance at this week’s high of $362.75. The next downside price objective for the bears is to close prices below solid technical support at $345.00. First resistance is seen at $354.00 and then at $356.00. First support is seen at $350.00 and then at $348.00.
What to do: Get current with feed coverage. Carry all production risk in the cash market for now.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you have full coverage in cash through July, with half of your needs for August, September, October, November and December covered in cash. For corn, you have all needs through August covered in the cash market, with half of your needs for September and October covered in cash.