Hogs
Price action: February lean hog futures rose $1.075 to $85.70, nearer the session high.
Fundamental analysis: Lean hog futures today saw the bulls step in to do some perceived bargain hunting following this week’s dip. Bulls are concerned about a weakening cash hog market and CME lean hog index recently.
The latest CME lean hog index is down 10 cents to $80.50. Thursday’s projected cash index price is down another 11 cents at $80.39. Today’s national direct 5-day rolling average cash hog price quote is $68.56. The noon report today showed pork cutout value down 12 cents at $91.68, led by losses in ribs and bellies. Movement at midday was 216.53 loads.
Technical analysis: February lean hog futures have the overall near-term technical advantage and regained strength today as a price uptrend on the daily bar chart will be restarted if there is follow-through price strength yet this week. The next upside price objective for the hog bulls is to close February futures prices above solid chart resistance at the January high of $86.50. The next downside price objective for the bears is closing prices below solid technical support at $83.00. First resistance is seen at $86.50 and then at $87.50. First support is seen at $85.00 and then at this week’s low of $83.775.
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 March in the cash market. You should also have corn-for-feed needs purchased through February. Be prepared to make additional purchases.
Cattle
Price action: February live cattle fell $2.10 to $235.15, near the session low. March feeder cattle lost $2.425 to $359.70, nearer the session low after hitting a 2.5-month high early on.
Fundamental analysis: The live and feeder cattle futures markets today saw routine profit-taking pressure after both hit 2.5-month highs on Tuesday. Technical charts and fundamentals remain overall bullish, suggesting the bulls will continue to step in and buy the dips.
USDA today reported very light cash cattle trading so far this week, averaging $233.00. USDA Monday reported cash cattle trading last week averaged $231.86, which is up 18 cents from the prior week. The noon report today showed wholesale boxed beef cutout values firmer. Choice-grade was up $1.34 at $359.33, while Select-grade gained 33 cents to $357.51. Movement at midday was 78 loads. The Choice-Select spread at midday today was plus $1.82.
Technical analysis: The live and feeder cattle futures bulls still have the firm overall near-term technical advantage and gained more power today. Price uptrends are in place on the daily bar charts. The next upside price objective for the live cattle bulls is to close February futures above resistance at $240.375, which is the top of a downside price gap on the daily bar chart. The next downside technical objective for the bears is closing prices below solid technical support at $230.00. First resistance is seen at this week’s high of $237.30 and then at $239.00. First support is seen at this week’s low of $233.95 and then at $2.33.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at $370.00. The next downside price objective for the bears is to close prices below solid technical support at $345.00. First resistance is seen at today’s high of $362.90 and then at $365.00. First support is seen at Tuesday’s low of $356.175 and then at this week’s low of $353.65.
What to do: Cover corn-for-feed needs through February 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 February as well. Be prepared to make additional purchases if value prices continue.