Hogs
Price action: December lean hogs rose $1.20 to $83.275, near mid-range after hitting a two-month low early on.
Fundamental analysis: The lean hog futures market saw more short covering today after prices last Friday hit a nearly two-month low. December futures’ discount to the cash market also supported buying interest in futures. Decent gains in the cattle futures markets early this week have also supported some buying interest in hog futures.
The latest CME lean hog index is down another 54 cents at $95.58. Wednesday’s projected cash hog index is down another 60 cents at $94.98. Today’s national direct 5-day rolling average cash hog price quote is $91.77. The noon report today showed pork cutout value down 9 cents to $101.99. Movement at midday was 184.22 loads.
Technical analysis: December lean hog futures bears have the firm overall near-term technical advantage. Prices are in a steep 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 $86.00. The next downside price objective for the bears is closing prices below solid technical support at $80.00. First resistance is seen at today’s high of $83.425 and then at $84.45. First support is seen at today’s low of $82.025 and then at $81.00.
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 October covered in the cash market.
Cattle
Price action: December live cattle rose $1.775 to $245.425, near the daily high. November feeder cattle rose 80 cents to $373.475, nearer the daily high.
Fundamental analysis: The live and feeder cattle futures markets are having a good week so far. December live cattle have clawed back most of Friday’s big losses, while November feeders have at least stabilized the market after the limit-down move last Friday.
Cattle futures shook off news today regarding the Trump administration’s plans to lower U.S. beef prices at the meat counter. USDA Secretary Rollins said the administration plan aims to ease supply constraints and boost processing capacity. Also, the government will embark on “a pretty big” initiative to open additional lands for ranching in a bid to bring down beef prices. Rollins said on CNBC today that while President Trump is in talks with Argentina regarding beef imports, any purchases from the South American country “wouldn’t be significant from the U.S. point of view.”
USDA has reported no cash cattle trade occurring so far this week. USDA Monday reported last week’s average cash cattle trade at $239.82. The noon report today showed wholesale boxed beef cutout values mixed, with Choice-grade up $2.93 to $372.11, while Select fell $1.18 to $352.28. Movement at midday was 71 loads. The Choice-Select spread is presently $19.83.
Technical analysis: The live and feeder cattle futures bulls have the firm overall near-term technical advantage. The next upside price objective for the live cattle bulls is to close December futures above resistance at the contract high of $248.30. The next downside technical objective for the bears is closing prices below solid technical support at $235.00. First resistance is seen at $247.00 and then at $248.30. First support is seen at last Friday’s low of $241.40 and then at $240.00.
The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at the contract/record high of $382.80. The next downside price objective for the bears is to close prices below solid technical support at $360.00. First resistance is seen at this week’s high of $375.15 and then at $377.00. First support is seen at this week’s low of $368.725 and then at $365.00.
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 December. For corn, you have all needs through October covered in the cash market. Be prepared to make additional purchases if value prices continue.