Hogs
Price action: April lean hog futures fell $0.15 to $90.90, nearer the session low and hit a nine-week low.
Fundamental analysis: The lean hog futures market saw mild technical selling pressure today amid a price downtrend in place on the daily chart.
The rally in the cash hog market has stalled out and prices are starting to slip. The latest CME lean hog index is down 7 cents at $91.71. Thursday’s projected cash index price is down another 5 cents at $91.65. The national direct five-day rolling average cash hog price quote today is $69.44. The noon report today showed pork cutout value up $0.23 at $97.20, led by gains in ribs. Movement at midday was good at 213.92 loads.
Technical analysis: April lean hog futures bears have the near-term technical advantage. Prices are in a three-week-old downtrend on the daily bar chart. The next upside price objective for the hog bulls is to close April futures prices above solid chart resistance at $94.00. The next downside price objective for the bears is closing prices below solid technical support at $90.00. First resistance is seen at $92.00 and then at $93.00. First support is seen at $90.00 and then at $89.00.
What to do: Get current with feed coverage.
Hedgers: You have 50% of Q2 production hedged with all remaining risk in the cash market.
Feed needs: You should have all your soymeal needs covered through March in the cash market. You should also have corn-for-feed needs purchased through March. Be prepared to make additional purchases.
Cattle
Price action: April live cattle fell $0.95 to $234.425, near mid-range. March feeder cattle lost $0.65 to $350.05, near mid-range and hit a three-week high early on.
Fundamental analysis: The cattle futures markets today saw pauses amid fledgling price uptrends in place on the daily bar chart. Selling interest was limited today amid improved investor risk appetite in the general marketplace. However, buying interest was squelched by a big drop in Choice-grade boxed beef prices.
Higher cash cattle prices are seen in early trade this week, albeit very light. USDA Tuesday reported cash cattle trading at $236.00. The agency on Monday reported cash trading last week averaged $235.08. The noon report today showed wholesale boxed beef cutout values mixed, with Choice grade dropping below Select. Choice-grade was down $7.91 at $392.00, while Select-grade was up $2.53 at $397.03. Movement at midday was good at 85 loads. The Choice-Select spread at midday today was minus $5.03. Beef packer margins are still in the black at mid-week.
In the Plains states, another heat wave in the next three days will be stressful to livestock in the region.
Technical analysis: Cattle futures markets bulls have restarted price uptrends on the daily bar charts. The next upside price objective for the live cattle bulls is to close April futures above resistance at $239.95. The next downside technical objective for the bears is closing prices below solid technical support at the March low of $227.325. First resistance is seen at this week’s high of $236.30 and then at $238.00. First support is seen at this week’s low of $233.35 and then at $232.00.
The next upside price objective for the feeder bulls is to close May futures prices above technical resistance at $360.00. The next downside price objective for the bears is to close prices below solid technical support at the March low of $336.45. First resistance is seen at today’s high of $353.275 and then at $355.00. First support is seen at $347.50 and then at this week’s low of $345.425.
What to do: Cover corn-for-feed needs through March 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 March. You have corn-for-feed needs covered through March as well. Be prepared to make additional purchases if value prices continue.