Hogs
Price action: April lean hog futures fell 80 cents to $94.825, near mid-range and hit a two-week low.
Fundamental analysis: Lean hog futures today saw some more profit taking from the shorter-term speculators, as well as some spillover pressure from more big losses in the cattle futures market amid another risk-off day in the general marketplace.
The latest CME lean hog index is up 19 cents at $90.74. Tuesday’s projected cash index price is up another 13 cents at $90.87. The national direct five-day rolling average cash hog price quote today is $67.61. The noon report today showed pork cutout value up $3.80 at $102.07, led by gains across the boards. Movement at midday was 135.42 loads.
Technical analysis: April lean hog futures bulls still have the slight overall near-term technical advantage but need to show fresh power soon to keep it. The next upside price objective for the hog bulls is to close April futures prices above solid chart resistance at last week’s high of $97.30. The next downside price objective for the bears is closing prices below solid technical support at the February low of $91.125. First resistance is seen at today’s high of $95.50 and then at $96.55. First support is seen at today’s low of $94.10 and then at $93.00.
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 $4.425 to $230.15, nearer the daily high and hit a nearly three-month low early on. March feeder cattle lost $4.975 to $350.65, nearer the daily high and hit a more-than-two-month low early on.
Fundamental analysis: The cattle futures markets today saw heavy selling pressure today amid keener risk aversion in the general marketplace amid the war in Iran that shows no sign of ending. Cattle traders were also spooked by news the JBS beef packing plant in Greeley, Colorado, is facing a potential shutdown due to a labor strike. While not a permanent closure, union workers are threatening to walk out as early as March 16, reports said. The cattle futures markets did move well off their daily lows when the U.S. stock indexes did the same, and crude oil prices backed well down from their overnight high.
Lower cash cattle trading prices last week, from the week prior, also helped to pressure cattle futures today. USDA at midday today reported last week’s average cash cattle trade at $239.94, which is down $2.77 from the week prior. The noon report today showed wholesale boxed beef cutout values firmer. Choice-grade was up $3.44 at $390.66, while Select-grade rose $2.28 to $381.23. Movement at midday was light at 21 loads. The Choice-Select spread at midday today was plus $9.43.
Technical analysis: Today’s big downside price gaps on the daily charts in cattle futures did more chart damage to better suggest at least near-term market tops are in place. The next upside price objective for the live cattle bulls is to close April futures above resistance at last week’s high of $239.95. The next downside technical objective for the bears is closing prices below solid technical support at $220.00. First resistance is seen at today’s high of $230.925 and then at $233.675. First support is seen at today’s low of $227.325 and then at $225.00.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at last week’s high of $364.825. The next downside price objective for the bears is to close prices below solid technical support at $335.00. First resistance is seen at today’s high of $352.325 and then at $354.75. First support is seen at today’s low of $346.375 and then at $345.00.
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.