Livestock Analysis | October 25, 2021

( )

Hogs

Price action: December lean hog futures rose 87.5 cents to $74.20 per hundredweight, the second consecutive daily gain after prices fell to a one-month low last week. April and most other deferred contracts ended slightly lower.

Fundamental analysis: Nearby lean hog futures posted a moderate corrective bounce after tumbling 6.3% last week. Weak cash fundamentals continue to burden the market, though wholesale pork has showed signs of stabilizing. Pork cutout values rose $2.24 early today to $100.51, led by a gain of over $23 in bellies, USDA reported. But cutout values recently have often risen early before ending the day lower. Pork cutout values fell 3.0% last week but are but up from a 7 1/2-month low at $96.87 reached Oct. 20. Tomorrow’s CME lean hog index is expected to drop 72 cents; the current reading, $83.70, is the lowest since $83.27 on March 2. Carcasses on national direct markets early today fell to an average of $63.63, after dropping 2.5% last week, to $65.63.

Technical analysis: Futures may see consolidation this week following last week’s steep losses, though the market’s bearish slant could push prices toward the September lows. Chart levels to watch in December lean hogs include last week’s low at $72.875, the lowest intraday price since $72.50 on Sept. 22, and $71.275, a seven-month low reached Sept. 16.

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 rose $1.20 to $129.525 per hundredweight, up from a two-week closing low Friday. January feeder cattle rose $1.25 to $158.575.

Fundamental analysis: Live cattle futures climbed after USDA on Friday reported an unexpected decline in feedlot placements in September. Feedlot operators placed 2.163 million head of cattle on feed during September, down 2.9% from the same month a year earlier, according to USDA’s Cattle on Feed Report Friday. Analysts on average projected an increase of about 1.4%, based on a Reuters survey. An estimated 11.55 million head of cattle were on feed as of Oct. 1, down 1.4% from a year earlier and larger than the 0.6% decline analysts expected. The smaller numbers underscore the industry’s herd contraction in recent years and indicates beef supplies in the pipeline for 2022 will remain limited.

A firmer cash market and signs of stabilization in boxed beef prices are also supporting futures, though Choice cutout values fell $1.59 to $280.23 early today, according to a USDA report. Choice cutout values ended last week at $281.82, up 0.6% from Oct. 15 and the first weekly gain in eight weeks. Live steers in five top feedlot areas last week averaged $124.39, up 0.4% for the week and the third consecutive weekly gain. Cash prices have risen closer to the October contract, which expires Oct. 29 and settled today at $125.05.

Technical analysis: December live cattle traded within last week’s range today and may extend the sideways price action seen the past two weeks as trader wait for the cash markets to establish. Chart levels to watch include last week’s low and high at $128.25 and $131.125, respectively, and the 100- and 200-day moving averages around $131.15 and $128.45, respectively.

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.

 

Latest News

H&P Report negative compared to pre-report expectations
H&P Report negative compared to pre-report expectations

Nearly every category topped the average pre-report estimates.

After the Bell | March 28, 2024
After the Bell | March 28, 2024

After the Bell | March 28, 2024

Pro Farmer's Daily Advice Monitor
Pro Farmer's Daily Advice Monitor

Pro Farmer editors provide daily updates on advice, including if now is a good time to catch up on cash sales.

PF Report Reaction: Bullish USDA data for corn
PF Report Reaction: Bullish USDA data for corn

Corn planting intentions and March 1 stocks came in lower than expected.

Report Snapshot: USDA shows lighter-than-expected corn acres and stocks
Report Snapshot: USDA shows lighter-than-expected corn acres and stocks

USDA reported corn acres of 90.036 million acres for 2024 and March 1 stocks of 8.347 billion bu., both well below trade estimates. Soybean acres were slightly lower than expectations, while stocks were higher.