New Advice Alert: Livestock producers: Extend feed coverage... We advise livestock producers to cover remaining corn-for-feed needs in the cash market for December, January and February. Prices have found stiff support near the November lows and are at what we consider value levels. Price action could remain choppy ahead of the January production report, though we continue to anticipate production will come in below USDA’s expectations. You now have all needs through February covered in the cash market for corn. Meal needs are covered through February as well.
Hogs
Price action: February lean hogs fell $1.775 to $83.00, nearer the session low.
Fundamental analysis: Lean hog futures saw heavy profit-taking pressure today, following recent gains that pushed prices to a six-week high earlier this week. The near-term chart posture for the market remains bullish as prices are still in an uptrend. Recent gains in the cash hog market and the CME hog index also suggest seasonal bottoms are in place for cash and futures markets.
The latest CME lean hog index is up 31 cents to $83.30. Thursday’s projected cash index price is up another 57 cents at $83.87. Today’s national direct 5-day rolling average cash hog price quote is $71.10. The noon report today showed pork cutout value down 94 cents to $97.62, led by losses in picnics, hams and bellies. Movement at midday was 150.06 loads.
Technical analysis: February lean hog futures bulls still have the overall near-term technical advantage. Prices are trending up on the daily chart but the bulls need to show power yet again this week to keep it alive. The next upside price objective for the hog bulls is to close February 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 last week’s low of $80.65. First resistance is seen at $84.00 and then at last week’s high of $85.075. First support is seen at this week’s low of $82.40 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 February in the cash market. You should also have corn-for-feed needs purchased through February. Be prepared to make additional purchases.
Cattle
Price action: February live cattle fell $1.15 to $229.55, near the daily low. January feeder cattle lost $1.80 to $341.525, near the session low.
Fundamental analysis: The live and feeder cattle futures markets saw some profit-taking from the shorter-term futures traders today. Still, the markets so far this week are pausing after recent good gains, which is not bearish and suggests the near-term price uptrends will continue. Higher cash cattle trade so far this week, following last week’s solid gains, is limiting seller interest in the cattle futures this week.
USDA at midday today reported very light cash cattle trading at $229.00. The noon report today showed wholesale boxed beef cutout values weaker, with Choice-grade down $1.96 at $356.92, while Select-grade fell 26 cents to $348.84. Movement at midday was good at 91 loads. The Choice-Select spread has narrowed to $8.08.
Cattle futures traders are looking ahead to Friday afternoon’s USDA monthly cattle-on-feed report.
Technical analysis: The live and feeder cattle futures bulls have the firm near-term technical advantage. Prices are trending up on the daily bar charts, suggesting the path of least resistance will remain sideways to higher in the near term. The next upside price objective for the live cattle bulls is to close February futures above resistance at $235.00. The next downside technical objective for the bears is closing prices below solid technical support at $225.00. First resistance is seen at last week’s high of $231.775 and then at $233.00. First support is seen at $228.70 and then at last week’s low of $225.65.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $348.175, which is the top of a downside price gap on the daily bar chart. The next downside price objective for the bears is to close prices below solid technical support at $330.00. First resistance is seen at last week’s high of $345.25 and then at $348.175. First support is seen at today’s low of $341.35 and then at this week’s low of $337.70.
What to do: Cover corn-for-feed needs through February 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 February. You have corn-for-feed needs covered through February as well. Be prepared to make additional purchases if value prices continue.