Hogs
Price action: June lean hogs rose $2.775 to $97.95, near the daily high and hit a three-week high.
Fundamental analysis: The lean hog futures market today saw short covering from the bears and perceived value buying from the bulls. The chart-based traders also likely did some buying today as June hogs are starting to trend higher. Solid gains in cattle futures markets today also likely spilled over into buying interest in hog futures.
Today’s gains in lean hog futures came despite persistent cash hog market weakness. The latest CME lean hog index is down another 63 cents to $85.37 as of April 14, marking 10 straight sessions of losses. The national direct five-day rolling average cash hog price quote today is $85.13.
The noon report today showed pork cutout value rose 89 cents to $92.62, led by gains in ribs. Rising pork cutout values have been encouraging, with a coinciding increase in movement indicating solid demand. Movement at midday was 168.80 loads. Grocers are ramping up purchases for the summer grilling season.
Technical analysis: Lean hog futures bulls have gained the overall near-term technical advantage as prices are trending up now. The next upside price objective for the hog bulls is to close June prices above solid chart resistance at the March high of $99.70. The next downside price objective for the bears is closing prices below solid technical support at $90.00. First resistance is seen at today’s high of $98.125 and then at $99.00. First support is seen at $96.00 and then at today’s low of $94.975.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You have all corn-for-feed needs covered in the cash market through April. You have all soymeal needs covered in the cash market through May.
Cattle
Price action: June live cattle rose $2.275 to $202.075, nearer the session high and hit a two-week high. May feeder cattle gained $1.875 to $284.40, nearer the session high and hit a two-week high.
Fundamental analysis: The cattle market bulls put their foot on the gas today and did some perceived value buying. Short covering was also featured today as the bears may have capitulated and exited their shorts after four straight sessions of price gains. Live cattle futures traders this week have significantly narrowed the discounts futures hold to the cash market.
Cash cattle trading so far this week has been virtually non-existent. Today’s strong gains in cattle futures are causing some to now believe steady-firmer cash cattle trade is possible this week, while others still think steady-weaker will be the case. Packers entered this week with extremely short inventories. The Good Friday holiday will make the week short for cattle slaughter levels. The noon report today showed wholesale boxed beef values weaker, with Choice down $1.37 to $334.06 and down 45 cents for Select to $314.79. The Choice-Select spread is currently at $19.27. Movement at midday was solid at 100 loads, suggesting solid underlying retailer demand for beef. Beef movement has picked up recently as grocers gear up for the start of the outdoor grilling season.
Traders are awaiting Thursday afternoon’s monthly USDA Cattle On Feed report, moved up one day due to the Good Friday holiday on Friday.
Technical analysis: Live and feeder cattle futures bulls and bears have the overall near-term technical advantage and have momentum on their side. The next upside price objective for the live cattle bulls is to close June futures above resistance at $203.70, which is the top of a downside price gap on the daily bar chart. The next downside technical objective for the bears is closing prices below solid technical support at the April low of $191.80. First resistance is seen at $203.70 and then at $205.00. First support is seen at today’s low of $199.575 and then at this week’s low of $197.075.
The next upside price objective for the feeder bulls is to close May futures prices above technical resistance at the contract high of $290.625. The next downside price objective for the bears is to close prices below solid technical support at the April low of $267.20. First resistance is seen at $287.00 and then at $288.40. First support is seen at today’s low of $281.90 and then at this week’s low of $279.375.
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: You have all corn-for-feed needs covered in the cash market through April. You have all soymeal needs covered in the cash market through May.