Hogs
Price action: April lean hog futures rose 90 cents to $93.45, near the daily high.
Fundamental analysis: Lean hog futures today saw some short covering and perceived bargain buying following recent steep losses. Bulls are still shaky and worried about a bearish pennant pattern that has now formed on the daily bar chart.
The latest CME lean hog index is up 6 cents at $87.19. Friday’s projected cash index price is up 40 cents at $87.59. The national direct five-day rolling average cash hog price quote today is $62.50. The noon report today showed pork cutout value up 54 cents at $96.10, led by gains in ribs. Movement at midday was 178.19 loads.
Technical analysis: April lean hog futures bulls have seen serious near-term technical damage inflicted recently, including a bearish pennant pattern forming on the daily bar chart, to suggest still more downside price pressure. The next upside price objective for the hog bulls is to close April futures prices above solid chart resistance at $95.00. The next downside price objective for the bears is closing prices below solid technical support at $89.00. First resistance is seen at $94.00 and then at $95.00. First support is seen at today’s low of $92.00 and then at last week’s low of $91.125.
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 rose 90 cents to $243.425, nearer the daily high and closed at a four-month-high close. March feeder cattle fell 30 cents to $370.275, near mid-range.
Fundamental analysis: The live cattle futures market today saw buying support as USDA today reported very light cash cattle trading so far this week at $249.00—well above last week’s average. USDA Monday reported cash cattle trading last week averaged $245.62, up $4.31 from the week prior. Active cash trade this week is likely to get pushed back late due to heavy pressure on packer margins and Friday’s USDA monthly cattle-on-feed report.
The noon report today showed wholesale boxed beef cutout values firmer. Choice-grade was up $1.30 at $365.10, while Select-grade rose 5 cents to $360.68. Movement at midday was 54 loads. The Choice-Select spread at midday today was plus $4.42.
Technical analysis: The live and feeder cattle futures bulls have the firm overall near-term technical advantage amid price uptrends in place on the daily bar charts. 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 February low of $234.55. First resistance is seen at the February high of $244.575 and then at $246.00. First support is seen at this week’s low of $241.80 and then at $240.00.
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 $360.00. First resistance is seen at this week’s high of $372.25 and then at the February high of $373.60. First support is seen at $367.50 and then at last week’s low of $363.35.
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.