Hogs
Price action: February lean hog futures rose 62 1/2 cents to $88.475, near mid-range after hitting a 3.5-month high early on.
Fundamental analysis: Lean hog futures today saw some technical buying early today and then some mild profit taking by the shorter-term speculators later in the session, to take prices off their daily highs. The premium February futures hold to the cash hog and CME index indicates futures traders look for a higher cash hog market in the coming weeks. Cash hog prices are on the rise this week.
The latest CME lean hog index is up 37 cents at $82.40. Friday’s projected cash index price is up another 67 cents at $83.07. The national direct five-day rolling average cash hog price quote today is $60.71. The noon report today showed pork cutout value up 60 cents at $94.58, led by gains in butts. Movement at midday was 131.84 loads.
Technical analysis: February lean hog futures bulls have the solid overall near-term technical advantage. Prices are trending higher on the daily bar chart. The next upside price objective for the hog bulls is to close February futures prices above solid chart resistance at $90.00. The next downside price objective for the bears is closing prices below solid technical support at the January low of $83.775. First resistance is seen at today’s high of $88.85 and then at $91.00. First support is seen at this week’s low of $87.525 and then at $86.00.
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 March 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 72 1/2 cents to $232.375, near the session low. March feeder cattle fell 10 cents to $359.275, near mid-range.
Fundamental analysis: The live cattle futures market saw some mild profit taking and position-squaring, while feeder cattle futures saw a pause in quieter trading, as market participants await Friday afternoon’s monthly USDA cattle-on-feed report. A Reuters survey of analysts expects the report to show cattle on feed as of Jan. 1 at 96.8% of the level seen one year ago at the same time. Placements in December are seen at 93.5% of a year ago. Marketings in December are expected by analysts to be at 101.5% of one year ago at the same time.
USDA today reported very light cash cattle trading so far this week, with steers averaging $232.70 and heifers $232.44. The agency Tuesday said last week’s cash cattle traded averaged $232.50, which was up 64 cents from the prior week average. The noon report today showed wholesale boxed beef cutout values lower. Choice-grade was down 22 cents at $365.89, while Select-grade lost $2.41 to $360.04. Movement at midday was light at 56 loads. The Choice-Select spread at midday today was plus $5.85.
Cattle producers in the Plains states are concerned about extreme cold in the northern Plains and a major winter storm in the southern Plains producing livestock stress.
Technical analysis: The live and feeder cattle futures bulls still have the overall near-term technical advantage. Price uptrends are in place on the daily bar charts. The next upside price objective for the live cattle bulls is to close February futures above resistance at $240.375, 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 $230.00. First resistance is seen at $235.00 and then at last week’s high of $237.55. First support is seen at Wednesday’s low of $231.225 and then at last week’s low of $229.25.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at $370.00. The next downside price objective for the bears is to close prices below solid technical support at $350.00. First resistance is seen at $361.00 and then at last week’s high of $365.00. First support is seen at last week’s low of $353.65 and then at $350.00.
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 March. You have corn-for-feed needs covered through February as well. Be prepared to make additional purchases if value prices continue.