Hogs
Price action: December lean hogs fell $1.00 to $82.60, near the daily low and hit a seven-week low.
Fundamental analysis: The lean hog futures market saw more technical selling pressure from the shorter-term speculative traders today amid firmly bearish near-term technical posture and eroding cash hog prices.
The latest CME lean hog index is down another 79 cents at $97.20. Friday’s projected cash hog index is down another 61 cents at $96.59. Today’s national direct 5-day rolling average cash hog price quote is $95.31. The noon report today showed pork cutout value up 17 cents to $102.13, led by gains in loins and bellies. Movement at midday was 176.52 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 $87.00. The next downside price objective for the bears is closing prices below solid technical support at $80.00. First resistance is seen at Wednesday’s high of $84.35 and then at this week’s high of $85.50. First support is seen at $82.00 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 $1.10 to $247.875, nearer the daily high and hit another contract high. November feeder cattle rose 27 1/2 cents to $380.95, near mid-range.
Fundamental analysis: December live cattle futures have now closed higher for 10 sessions in a row. Prior to yesterday, November feeders had closed higher for eight sessions in a row. That puts both markets into technically overbought territory and due for stronger corrective price pullbacks soon. The feeder cattle futures market is seeing some profit taking from the shorter-term futures traders that is now curbing gains. Still, amid the firmly bullish cash cattle, feeder cattle and beef market fundamentals, most of the speculative bearish futures traders do not want to step in front of a steaming locomotive.
USDA today reported very light cash cattle trade at $236.00. Cash cattle trade last week averaged $234.07, up $3.31 from the prior week average. The noon report today showed wholesale boxed beef cutout values mixed, with Choice-grade down $1.00 to $365.48, while Select rose 11 cents to $349.27. Movement at midday was 63 loads. The Choice-Select spread is presently $16.21.
Technical analysis: The live and feeder cattle futures bulls have the solid overall near-term technical advantage amid price uptrends in place on the daily bar charts. However, both markets are short-term overbought and due for stronger downside corrections. The next upside price objective for the live cattle bulls is to close December futures above resistance at $250.00. The next downside technical objective for the bears is closing prices below solid technical support at $235.00. First resistance is seen at today’s contract high of $248.30 and then at $250.00. First support is seen Wednesday’s low of $245.15 and then at Tuesday’s low of $243.50.
The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at $390.00. The next downside price objective for the bears is to close prices below solid technical support at $360.00. First resistance is seen at the contract high of $382.45 and then at $385.00. First support is seen at Tuesday’s low of $375.175 and then at this week’s low of $373.375.
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.