Livestock Analysis | November 1, 2021

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Hogs: December lean hog futures rose 7.5 cents to $76.15 and near mid-range. February and other deferred contracts ended higher.

Fundamental analysis: Hog futures fell in a corrective setback, with little followthrough from sharp gains late last week. Still-weak cash market fundamentals continue to weight on futures. However, there are signs that the wholesale pork market’s downturn may have spurred renewed consumer demand. The outlook for smaller U.S. pork supplies early next year continues to support deferred futures.

USDA reported pork cutout values early today at $98.48, up $1.96 and led by gains in picnics, hams and bellies. Movement was 162.75 loads. The national direct cash hog price was up 4 cents today, with the five-day rolling average at $62.03. The latest CME lean hog index is down 81 cents today to $79.89, the lowest since Feb. 12. Today’s hog slaughter is estimated at 481,000 head, compared to 478,000 last Monday and 492,000 one year ago at this time.

Technical analysis: Lean hog futures bears have the overall near-term technical advantage. Prices are in a four-week-old downtrend on the daily bar chart. The next upside price objective for the hog bulls is to close December prices above solid chart resistance at $80.000. The next downside price objective for the bears is closing prices below solid technical support at the September low of $71.275. First resistance is seen at last week’s high of $77.25 and then at $78.50. First support is seen at $75.00 and then at $73.80.

What to do: Get current with feed advice.

Hedgers: You currently have all risk in the cash market.

Feed needs: You should have all corn-for-feed and soybean meal needs covered in the cash market through October.

 

Cattle

Price action: December live cattle futures fell 42.5 cents to $128.85, the lowest closing price since Oct. 22. January feeder cattle fell $3.40 to $152.725, the contract’s lowest settlement since $151.975 on May 11.

Fundamental analysis: Live cattle futures extended a downtown late last week to close at the lowest level in over a week. Futures appeared to have established a near-term peak last week and will require further strength in cash markets and boxed beef to extend gains. Boxed beef prices are starting to pull out of a two-month slump, with Choice cutout values rising 43 cents this morning to $286.15, though movement was light at just 30 loads.

Cash cattle are building momentum higher, though it will likely take toward the middle of the week to establish a discernable tone. On Friday, live steers in five top feedlot regions averaged of $126.29, up nearly $1.90 from the previous week and the fourth consecutive weekly gain. Meatpackers slaughtered an estimated 668,000 head of cattle last week, up 1.1% from last week and up 4.4% from the same week last year. Slaughter so far in 2021 is up 3.2% from 2020 levels at this point.

Technical analysis: Bearish traders have a small technical edge. In December live cattle futures, a push below the 200-day moving average around $128.70, just under today’s settlement, and/or below the Oct. 22 low of $128.25 would violate the modest uptrend from the Oct. 1 low and could result in another leg lower. Chart levels to watch include the October low at $125.00 and last week’s high at $131.925.

What to do: Get current with feed advice. Be prepared to add cattle hedges if the rally stalls.   

Hedgers: Carry all risk in the cash market for now.

Feed needs: You should have all corn-for-feed and soybean meal needs covered in the cash market through October.

 

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