Hogs
Price action: December lean hogs rose 45 cents to $83.60, nearer the daily low.
Fundamental analysis: The lean hog futures market saw some short covering today after hitting a seven-week low Tuesday. Gains will continue to be limited by the still-bearish near-term technical posture and falling cash hog prices.
The latest CME lean hog index is down another 58 cents at $97.99. Wednesday’s projected cash hog index is down another 79 cents at $97.20. Today’s national direct 5-day rolling average cash hog price quote is $95.95. The noon report today showed pork cutout value down 78 cents to $102.98, led by losses in bellies. Movement at midday was 164.93 loads.
Technical analysis: December lean hog futures bears still have the firm overall near-term technical advantage. Prices are in a steep downtrend on the daily bar chart. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at $87.50. The next downside price objective for the bears is closing prices below solid technical support at $80.00. First resistance is seen at today’s high of $84.35 and then at this week’s high of $85.50. First support is seen at this week’s low of $82.625 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 December in the cash market. For corn, you now have all needs through October covered in the cash market.
Cattle
Price action: December live cattle rose 27 1/2 cents to $246.775, nearer the daily high. November feeder cattle lost 65 cents at $380.675, nearer the daily high.
Fundamental analysis: The live and feeder cattle futures markets saw some routine profit-taking pressure early on today after hitting contract highs on Tuesday. However, both markets rebounded late in the session to erase most or all of their losses.
Price-friendly supply and demand fundamentals in the cash cattle and beef markets, as well as still-bullish charts, will likely continue to keep a floor under the futures markets. However, the cattle futures markets are still short-term overbought, technically, and due for stronger corrective price pullbacks.
USDA at mid-week reported very light cash cattle trade at $236.00. Cash cattle trade last week averaged $234.07, up $3.31 from the prior week average. The noon report today showed wholesale boxed beef cutout values mixed, with Choice-grade up $2.11 to $366.53, while Select fell $1.24 to $349.31. Movement at midday was solid at 117 loads. The Choice-Select spread is presently $17.22.
Technical analysis: The live and feeder cattle futures bulls still have the solid overall near-term technical advantage. However, both markets are short-term overbought and due for stronger downside corrections. The next upside price objective for the live cattle bulls is to close December futures above resistance at $250.00. The next downside technical objective for the bears is closing prices below solid technical support at $235.00. First resistance is seen at the contract high of $246.575 and then at $248.00. First support is seen at Tuesday’s low of $243.50 and then at this week’s low of $242.15.
The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at $390.00. The next downside price objective for the bears is to close prices below solid technical support at $360.00. First resistance is seen at the contract high of $382.45 and then at $385.00. First support is seen at Tuesday’s low of $375.175 and then at this week’s low of $373.375.
What to do: Get current with feed coverage. Carry all production risk in the cash market for now.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you have full coverage in cash through December. For corn, you have all needs through October covered in the cash market. Be prepared to make additional purchases if value prices continue.