Hogs
Price action: December lean hogs fell 40 cents to $81.50, nearer the daily low and hit a 2.5-month low.
Fundamental analysis: The lean hog futures market saw mild technical selling pressure today. Bearish technicals and steadily declining cash hog market prices are prompting selling in hog futures. Lean hog bulls are encouraged by the fact hog futures prices are remaining fairly stable amid the huge price downdrafts in the cattle futures markets. December lean hog futures’ discount to the cash index has limited selling interest in futures lately.
The latest CME lean hog index is down another 55 cents at $93.63. Tuesday’s projected cash hog index is down another 68 cents at $92.27. Today’s national direct 5-day rolling average cash hog price quote is $88.93. The noon report today showed pork cutout value down $1.34 to $101.40. Movement at midday was decent at 193.76 loads.
Technical analysis: December lean hog futures bears 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 $84.00. 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 $82.575 and then at last week’s high of $84.05. First support is seen at today’s low of $81.275 and then at $80.00.
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 November covered in the cash market.
Cattle
Price action: December live cattle fell $6.75 to $227.175, nearer the daily low and hit a three-month low after trading down the expanded trading limit earlier today. January feeder cattle dropped the expanded daily trading limit of $13.75 to $334.425 and hit a 2.5-month low.
Fundamental analysis: Panic long liquidation and margin-call selling by the speculative futures traders were featured in the live and feeder cattle futures markets today. This follows news last week that President Trump has vowed to lower U.S. beef prices at the meat counter. Meantime, Mexico’s agriculture minister will travel to Washington D.C. this week to work on an agreement to reopen the U.S. border to Mexican cattle supplies.
USDA at midday today reported the average cash cattle trade last week was $237.89. That’s down $1.93 from the week prior average of $239.82. The noon report today showed wholesale boxed beef cutout values higher to sharply higher, with Choice-grade up $1.64 to $377.40, while Select rose $5.29 to $363.26. Movement at midday was 79 loads. The Choice-Select spread is presently $14.14.
Technical analysis: The live and feeder cattle futures bears have quickly gained the overall near-term technical advantage. Prices are in steep downtrends on the daily bar chart. The next upside price objective for the live cattle bulls is to close December futures above resistance at $235.00. The next downside technical objective for the bears is closing prices below solid technical support at $215.00. First resistance is seen at $230.00 and then at $232.00. First support is seen at today’s low of $223.175 and then at $221.00.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $348.175, which is the top of a downside price gap created today on the daily chart. The next downside price objective for the bears is to close prices below solid technical support at $320.00. First resistance is seen at $338.00 and then at today’s high of $340.50. First support is seen at today’s low of $330.00 and then at $327.50.
What to do: Cover your corn-for-feed needs in the cash market through November.
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 November covered in the cash market. Be prepared to make additional purchases if value prices continue.