Hogs
Price action: October lean hog futures rose $1.775 to $83.675, nearer the daily high and hit a three-week high.
Fundamental analysis: The lean hog futures market saw more short covering and perceived bargain buying today as the charts are starting to suggest the market has bottomed out. A price downtrend on the daily bar chart was negated today. Stabilization in the cattle futures markets the past three sessions has also benefitted the lean hog futures bulls.
However, the cash hog market continues to trend down. The latest CME lean hog index down 62 cents to $91.52. Tuesday’s projected CME index price is down another 66 cents at $90.86. The national direct five-day rolling average cash hog price quote for today is $90.49. The USDA’s noon pork report today showed cutout value was up $3.49 at $99.55, led by gains in picnics and bellies. Movement at midday was 143.25 loads.
Technical analysis: October lean hog futures have seen a price downtrend on the daily bar chart negated. There are now several early chart clues the hog futures market has put in a near-term bottom. The next upside price objective for the hog bulls is to close October 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 week’s high of $83.835 and then at $85.00. First support is seen at today’s low of $81.975 and then at $81.00.
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 and soymeal needs covered through September in the cash market. Be prepared to make purchases if value prices continue.
Cattle
Price action: October live cattle rose $0.95 to $212.675, near mid-range. November feeder cattle rose $0.50 to $310.425, nearer the daily low.
Fundamental analysis: October live cattle and November feeder futures today saw more short-covering buying and corrective rebounds after both markets hit eight-month lows last week. Gains were limited by cash cattle trading last week at solidly lower money.
USDA today announced a new “Ranchers First Initiative” in an attempt to address the financial risk of retaining breeding heifers. The new Beef Retention and National Development is termed BRAND. Details here.
USDA at midday today reported cash cattle last week averaged $219.25. That compares to last week’s cash cattle trading activity averaging $225.01. The noon report today showed lower boxed beef prices, with Choice grade down $1.03 at $375.20 and Select grade down $6.57 at $354.51. Movement at midday was solid at 132 loads. The Choice-Select spread is presently plus $20.69.
Technical analysis: The next upside price objective for the live cattle bulls is to close October futures above resistance at $220.00. The next downside technical objective for the bears is closing prices below solid technical support at $200.00. First resistance is seen at $214.225 and then at $217.00. First support is seen at the August low of $209.525 and then at $208.00.
The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at $325.00. The next downside price objective for the bears is to close prices below solid technical support at $300.00. First resistance is seen at $314.45 and then at last week’s high of $318.175. First support is seen at $307.95 and then at the August low of $304.15.
What to do: You have corn-for-feed and soymeal needs covered through September in the cash market. Be prepared to make additional purchases.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: You have corn-for-feed and soymeal needs covered through September in the cash market. Be prepared to make purchases if value prices continue.