Hogs
Price action: December lean hogs rose 95 cents to $78.85, near mid-range.
Fundamental analysis: Lean hog futures market today saw short covering in a bear market. Steadily declining cash hog prices and weakening pork cutout values limited buying interest today and will likely continue to do so. Lean hog futures’ discount to the cash market also worked in the hog futures bulls’ favor today.
The latest CME lean hog index is down another 33 cents at $86.67. Thursday’s projected cash index price is down 40 cents to $86.27. Today’s national direct 5-day rolling average cash hog price quote is $76.55. The noon report today showed pork cutout value down $1.22 to $94.17, led by losses in bellies. Movement at midday was 187.76 loads.
Technical analysis: December lean hog futures bears have the firm overall near-term technical advantage. A price downtrend is in place on the daily bar chart and a minor bearish pennant pattern may now be forming. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at last week’s high of $83.25. The next downside price objective for the bears is closing prices below solid technical support at the July low of $77.725. First resistance is seen at today’s high of $79.70 and then at $81.00. First support is seen at this week’s low of $77.50 and then at $76.00.
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 $3.725 to $216.30, nearer the daily low and hit a 4.5-month low. January feeder cattle lost $4.60 to $321.45 and nearer the daily low.
Fundamental analysis: The live and feeder cattle futures markets saw heavy technical selling pressure kick in again today. Weakening cash cattle prices this week were also bearish for futures. Somewhat elevated risk aversion in the general marketplace at mid-week limited speculator buying interest in the cattle futures.
USDA today reported light cash cattle trading so far this week, with steers averaging $220.29 and heifers averaging $220.00. Last week’s USDA average cash cattle trading price was $225.06, down $3.64 from the week prior. The noon report today showed wholesale boxed beef cutout values mixed again, with Choice-grade up 31 cents at $372.26, while Select-grade lost $1.89 to $353.06. Movement at midday was good at 116 loads. The Choice-Select spread is presently $19.20.
Cattle futures traders are awaiting Friday afternoon’s USDA monthly cattle-on-feed report.
Technical analysis: The live and feeder cattle futures bears have the overall near-term technical advantage. Prices are in downtrends on the daily bar charts. The next upside price objective for the live cattle bulls is to close December futures above resistance at $225.00. The next downside technical objective for the bears is closing prices below solid technical support at $206.00. First resistance is seen at today’s high of $220.325 and then at this week’s high of $222.40. First support is seen at today’s low of $213.575 and then at $210.00.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $340.00. The next downside price objective for the bears is to close prices below solid technical support at last week’s low of $310.05. First resistance is seen at this week’s high of $328.075 and then at last week’s high of $333.475. First support is seen at this week’s low of $314.525 and then at last week’s low of $310.05.
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.