Livestock Analysis | March 4, 2024
Price action: April lean hog futures dropped $1.80 to $86.275 and settled nearer session lows.
Fundamental analysis: Nearby lean hog futures fell under heavy selling pressure, negating Friday’s surge, though deferred contracts saw relative strength. Price action in the near-term is likely to be largely dictated by the CME lean hog index. As premiums grew to the index late last week, gains in the cash market slowed, bringing doubt as to whether those premiums are justified. That doubt led to weakness today and was further fueled by weakness in the wholesale market. The CME lean hog index is up 11 cents to $80.26 today and the preliminary calculation puts the index up another 15 cents to $80.41 tomorrow (as of Mar. 1). The premium April futures hold to the index fell to $5.865 today, though continued erratic price action in the index could induce further selling in futures.
Wholesale prices fell 18 cents at midsession to $94.27. Primal bellies, which fueled Friday’s surge higher, continued to rise this morning though failed to offset losses in hams, ribs and loins.
Technical analysis: April lean hog futures saw heavy selling pressure, though an uptrend remains on the daily bar chart, giving the near-term technical advantage to the bulls. Initial resistance stands at $87.20, backed by Friday’s for-the-move high close of $88.075, then $88.90. Additional selling seeks to overcome support at $86.15, the 10-day moving average, which is reinforced by $85.25, the uptrend line stemming from January low. Additional support stands at $84.925.
What to do: Get current with feed advice. Carry all production risk in the cash market for now.
Hedgers: Carry all risk in the cash market for now.
Feed needs: You have all corn-for-feed and soymeal needs covered in the cash market through March.
Price action: April live cattle dropped $1.775 to $186.675. May feeder cattle fell $2.40 to $257.775. Prices closed near the session lows.
Fundamental analysis: The cattle futures markets today saw profit-taking pressure following recent gains. Feeders saw selling interest as corn futures prices bounced today after hitting a contract low last week. Still, cash cattle market fundamentals are solid.
Cash cattle trade finished stronger last week after mostly steady trade earlier in the week. Last week’s average cash cattle trading price was $183.30, up 35 cents from the previous week. Cash trade will likely occur late again this week, with packer margins still in the red, packers just want to manage supplies. Packers are likely to reduce their kill hours, which should support beef prices. The noon report today showed wholesale beef cutout value up again, with Choice-grade gaining $1.39 to $306.67, while Select rose $1.61 to $297.35, narrowing the Choice/Select spread to $9.32. Movement at midday was light at 30 loads.
What to do: Get current with feed advice. All production risk in the cash market for now but be prepared for some hedge coverage as we have demand concerns.
Hedgers: Carry all risk in the cash market for now.
Feed needs: You have all corn-for-feed and soymeal needs covered in the cash market through March.
