Hogs
Price action: October lean hogs rose $1.725 to $100.525, near the daily high and hit another contract high.
Fundamental analysis: The lean hog futures market was boosted again today by follow-through gains in the cattle futures and a rebound this week in fresh pork prices. Technical buying has been featured as lean hogs remain in a solid price uptrend on the daily bar chart, with no strong chart clues of a market top being close at hand.
The latest CME lean hog index is down 36 cents at $104.98. Wednesday’s projected cash hog index is down another 8 cents at $104.90. Today’s national direct 5-day rolling average cash hog price quote is $105.86. The noon report today showed pork cutout value up another 75 cents to $114.05, led by gains in ribs and hams. Movement at midday was 142.47 loads.
Technical analysis: October lean hog futures bulls have the strong overall near-term technical advantage. A choppy, 2.5-month-old price uptrend remains in place on the daily bar chart. However, the market is now technically oversold and due for a corrective pullback soon. The next upside price objective for the hog bulls is to close October futures prices above solid chart resistance at $102.00. The next downside price objective for the bears is closing prices below solid technical support at $97.00. First resistance is seen at the contract high of $100.575 and then at $101.00. First support is seen at today’s low of $99.175 and then at this week’s low of $97.90
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 $1.55 to $235.60, nearer the daily low. November feeder cattle rose 85 cents to $360.75, near mid-range and hit a three-week high.
Fundamental analysis: The live cattle futures market today saw some corrective selling and chart consolidation following Monday’s good gains. Feeder cattle futures saw decent follow-through buying strength following Monday’s near-limit gains. Live and feeder cattle futures markets are now in positions to challenge or even exceed their recent contract/record highs.
The cattle markets are seeing sellers scarce this week, following last Friday’s bullish USDA cattle-on-feed report and the weekend news that a NWS case was found in Mexico and just 70 miles from the U.S. border.
There has been no cash cattle trading activity reported by USDA so far this week. Last week’s cash cattle trading average price was $237.51. That compares to prior week’s cash cattle trade averaged $239.33. The noon report today showed wholesale boxed beef cutout values mixed, with Choice-grade up $2.06 to $383.45, while Select fell 74 cents to $361.35. Movement at midday was 50 loads. The Choice-Select spread is presently $22.10.
Technical analysis: The live and feeder cattle bulls have the firm near-term technical advantage. The next upside price objective for the live cattle bulls is to close October futures above resistance at the contract high of $242.075. The next downside technical objective for the bears is closing prices below solid technical support at the September low of $228.80. First resistance is seen at this week’s high of $237.90 and then at $239.00. First support is seen at this week’s low of $233.90 and then at $232.00.
The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at the contract high of $367.65. The next downside price objective for the bears is to close prices below solid technical support at the September low of $342.125. First resistance is seen at today’s high of $363.775 and then at $365.00. First support is seen at $358.00 and then at $356.00.
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.