Hogs
Price action: April lean hog futures fell 7 1/2 cents to $98.375, near the session high.
Fundamental analysis: Lean hog futures today saw some more mild profit-taking pressure after hitting a contract high Wednesday. The sharp losses in cattle futures today kept the hog futures bulls timid. April futures’ big premium to the cash market still suggests futures traders look for more upside for the cash hog market in the coming weeks.
The latest CME lean hog index is up 23 cents at $86.06. Friday’s projected cash index price is up 32 cents at $86.38. The national direct five-day rolling average cash hog price quote today is $62.81. The noon report today showed pork cutout value up $1.31 at $94.31, led by gains in bellies. Movement at midday was 136.75 loads.
Technical analysis: April 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 April futures prices above solid chart resistance at $100.00. The next downside price objective for the bears is closing prices below solid technical support at $92.50. First resistance is seen at the contract high of $99.80 and then at $100.00. First support is seen at today’s low of $96.875 and then at $95.50.
What to do: Get current with feed coverage.
Hedgers: You have 50% of Q2 production hedged with all remaining 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 March. Be prepared to make additional purchases.
Cattle
Price action: April live cattle fell $6.20 to $235.60, near the daily low and hit a three-week low. March feeder cattle lost $6.00 to $364.075, near mid-range.
Fundamental analysis: The live and feeder cattle futures markets saw heavy profit-taking pressure from the speculators today. Beef packer margins that are in the red and today’s lower boxed beef prices were also negatives for futures.
USDA today reported very light cash cattle trading so far this week, with steers averaging $240.00 and heifers averaging $235.00. Last week’s average cash cattle trade was $239.44, up $4.74 from the week prior’s average cash trade at $234.70. The noon report today showed wholesale boxed beef cutout values weaker again. Choice-grade was down 82 cents at $367.20, while Select-grade lost $1.08 to $361.01. Movement at midday was light at 49 loads. The Choice-Select spread at midday today was plus $6.19.
Technical analysis: The live and feeder cattle futures bulls still have the overall near-term technical advantage amid price uptrends still in place on the daily bar charts. However, the bulls now appear tired. The next upside price objective for the live cattle bulls is to close April futures above resistance at the contract high of $250.925. The next downside technical objective for the bears is closing prices below solid technical support at the January low of $231.275. First resistance is seen at $241.325 and then at this week’s high of $244.575. First support is seen at today’s low of $234.55 and then at $232.65.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at the contract high of $378.60. The next downside price objective for the bears is to close prices below solid technical support at $353.00. First resistance is seen at today’s high of $368.275 and then at this week’s high of $373.60. First support is seen at today’s low of $360.825 and then at $358.325.
What to do: Cover corn-for-feed needs through March 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 March as well. Be prepared to make additional purchases if value prices continue.