Hogs
Price action: April lean hog futures rose $0.025 to $93.75, near mid-range.
Fundamental analysis: Lean hog futures this week are pausing as bulls work to stabilize the market after recent selling pressure. This week’s minor gains in hog futures prices, amid solid gains in the cattle futures, is not a good technical sign for hogs. The near-term technical posture for the lean hog futures market has turned less bullish the past two weeks.
The latest CME lean hog index is up 10 cents at $91.86. Thursday’s projected cash index price is up another 7 cents at $91.93. The national direct five-day rolling average cash hog price quote today is $68.74. The noon report today showed pork cutout value up 7 cents at $99.96, led by gains in ribs and bellies. Movement at midday was 162.90 loads.
Technical analysis: April lean hog futures bulls have faded recently. Prices are in a fledgling 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 the March high of $97.30. The next downside price objective for the bears is closing prices below solid technical support at the February low of $91.125. First resistance is seen at this week’s high of $94.20 and then at $95.00. First support is seen at last week’s low of $93.10 and then at $92.00.
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 rose $0.175 to $235.40, near the session high. March feeder cattle lost $1.075 to $358.725, near the session high.
Fundamental analysis: The cattle futures markets today saw a pause after good gains seen earlier this week. Selling was limited by the recent gains in boxed beef prices. Workers are striking at the Greeley, Colorado JBS facility. The company has shifted cattle deliveries to facilities in Grand Island, NE and Cactus, TX. Cattle traders will continue to closely monitor this situation.
No cash cattle trading has been reported by USDA as of midday today. The agency on Monday reported lower cash cattle trading last week, with the average price of $234.83—down $5.11 from the week prior. The noon report today showed wholesale boxed beef cutout values down a bit. Choice-grade was down 78 cents at $402.53, while Select-grade lost 19 cents to $396.53. Movement at midday was 49 loads. The Choice-Select spread at midday today was plus $6.00.
In the Plains states, high temperatures will reach the lower 100s in some places in the southwest this Friday and Saturday. The heat will notably stress livestock, especially after the rapid change from early-week unusually cold weather.
Cattle futures traders are looking ahead to Friday afternoon’s USDA monthly cattle-on-feed report.
Technical analysis: Cattle futures markets bulls have momentum to put price downtrends on the daily bar charts in jeopardy. 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 last week’s low of $227.325. First resistance is seen at this week’s high of $235.70 and then at $237.00. First support is seen at Tuesday’s low of $233.60 and then at this week’s low of $230.825.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at $364.825. The next downside price objective for the bears is to close prices below solid technical support at $340.00. First resistance is seen at this week’s high of $360.125 and then at $364.825. First support is seen at Tuesday’s low of $355.925 and then at this week’s low of $350.625.
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.