Hogs
Price action: February lean hog futures rose $2.05 to $86.15, nearer the session high and hit a 2.5-month high.
Fundamental analysis: Lean hog futures today saw a resumption of solid technical buying as prices are in an uptrend on the daily bar chart. The February lean hog futures contract is well above the latest CME lean hog index, which is bullish for futures and suggests futures traders expect the cash hog market to rally in the coming weeks.
The latest CME lean hog index is down 41 cents to $81.85. Tuesday’s projected cash index price is down 23 cents at $81.62. Today’s national direct 5-day rolling average cash hog price quote is $69.40. The noon report today showed pork cutout value up $1.88 at $96.45, led by gains in bellies. Movement at midday was 154.42 loads.
Technical analysis: February lean hog futures bulls have the firm overall near-term technical advantage and gained fresh power today. Prices are trending up on the daily chart. The next upside price objective for the hog bulls is to close February futures prices above solid chart resistance at $89.00. The next downside price objective for the bears is closing prices below solid technical support at $82.40. First resistance is seen at today’s high of $86.45 and then at $87.50. First support is seen at $85.00 and then at today’s low of $84.275.
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 February in the cash market. You should also have corn-for-feed needs purchased through February. Be prepared to make additional purchases.
Cattle
Price action: February live cattle fell 12 1/2 cents to $235.875, near mid-range after hitting a 10-week high early on. March feeder cattle gained $2.875 to $358.975, nearer the session high and hit a 10-week high.
Fundamental analysis: The live cattle futures market today saw a minor pause following solid gains posted late last week. More technical buying interest from the chart-based speculators was featured in feeder cattle futures. The near-term chart postures for both live and feeder cattle futures remain firmly in favor of the bulls. Higher cash cattle prices fetched last week also limited selling interest in futures today.
USDA today reported last week’s average cash cattle trade at $231.68—up $2.35 from the week prior. The noon report today showed wholesale boxed beef cutout values higher, with Choice-grade up $4.06 at $354.03, while Select-grade was up $2.63 to $349.55.
Movement at midday was light at 57 loads. The Choice-Select spread is $4.48.
Also price-friendly for cattle futures, Mexican authorities reported a case of the New World Screwworm parasite late last week, Reuters said, the second case reported in two days as Mexico works to contain an outbreak that has kept the U.S.-Mexico border closed to Mexican livestock. The parasite was detected and treated in a goat in the State of Mexico, which borders capital Mexico City, the ministry said, adding that the 20 other animals at the site tested negative and were given preventive treatment.
Technical analysis: The live and feeder cattle futures bulls have the firm overall near-term technical advantage. Price uptrends are in place on the daily bar charts. The next upside price objective for the live cattle bulls is to close February futures above resistance at $240.375, which is the top ofa downside price gap on the daily bar chart. The next downside technical objective for the bears is closing prices below solid technical support at $226.85. First resistance is seen at today’s high of $237.45 and then at $239.00. First support is seen at today’s low of $234.925 and then at $233.00.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at $370.00. The next downside price objective for the bears is to close prices below solid technical support at $343.00. First resistance is seen at today’s high of $357.10 and then at $360.00. First support is seen at today’s low of $353.125 and then at $350.00.
What to do: Cover corn-for-feed needs through February in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you have full coverage in cash through February. You have corn-for-feed needs covered through February as well. Be prepared to make additional purchases if value prices continue.