Livestock Analysis | September 15, 2021
Price action: October lean hog futures rose $1.90 to $82.275 per hundredweight, while December futures rose 7.5 cents to $72.25. Deferred contracts starting with February ended slightly lower.
Fundamental analysis: Nearby futures posted a technical bounce from yesterday’s drop to six-month lows, with firmer wholesale pork prices adding support, stirring beliefs the market is poised for seasonal strength. Pork cutout values rose 41 cents early today to $105.61, which followed a gain of more than $4 yesterday, USDA reports showed. Nearly 203 loads had moved by midday. National direct carcass values averaged $83.52 this morning, down from $84.07 yesterday. The latest CME lean hog index fell 63 cents to $96.77, the lowest since $95.97 on March 25. Slaughter so far this week was an estimated 1.433 million head, down 1.4% from the same period a year ago.
What to do: Make sure you’re current on feed advice. Be prepared to add fourth quarter hog hedges on a price recovery.
Hedgers: You currently have all risk in the cash market.
Feed needs: Cash coverage for meal stands at 75% for September and 25% for the fourth quarter. You should be hand-to-mouth on corn for feed needs.
Price action: October live cattle rose 5 cents to $124.175 per hundredweight, while December futures fell 20 cents to $129.45. October feeder cattle fell $1.65 to $156.50.
Fundamental analysis: Live cattle futures showed little followthrough buying strength following yesterday’s gains, partly due to ongoing weakness in wholesale beef prices. Choice cutout values fell another $2.38 early today to $320.51, the 13th consecutive daily decline. Cash cattle markets this week have seen light tests at mostly $124 and in a range from $123 to $125. In the north, cattle are trading at $200 dressed. Overall, so far this week it’s a mostly steady trade from last week’s cash levels. Cattle slaughter so far this week was an estimated 355,000 head, down from 360,000 for the same period a year ago. Sharp gains in corn prices today pressured feeder cattle.
Cattle futures bulls are hoping the recovering U.S. and global economies will keep consumer demand for beef stronger, which should at least maintain current cash price levels and also suggests the futures markets don’t have much more price downside. Traders will examine tomorrow’s weekly USDA export sales report to see if the U.S. beef sales can improve upon last week’s figures.
Technical analysis: The live and feeder cattle futures bears have the firm overall near-term technical advantage. However, there are stiff technical support levels that lie just below the latest quotes. Live cattle bulls' next upside price objective is to close October futures prices above solid resistance at $128.00. The next downside technical objective for the bears is closing October below solid technical support at the June low of $119.92. First resistance is seen at this week’s high of $125.05, then at $126.00. First support is seen at yesterday’s low of $122.675, then at this week’s low of $120.85.
For feeder bulls, the next upside objective is closing October futures prices above technical resistance at $161.00. The next downside price objective for the bears is to close October below solid technical support at $152.00. First resistance is seen at this week’s high of $158.85, then at $160.00. First support is seen at this week’s low of $154.775 and then at $153.00.
What to do: Get current with feed advice. Futures are signaling a short-term top is in place. We may add hedges for fed cattle soon.
Hedgers: Carry all risk in the cash market for now.
Feed needs: Cash coverage for meal stands at 75% for September and 25% for the fourth quarter. You should be hand-to-mouth on corn for feed needs.
