Hogs
Price action: December lean hogs rose $3.375 to $82.775, near the daily high.
Fundamental analysis: Lean hog futures today saw strong short covering and perceived bargain hunting after December futures hit a four-month low last Friday. Better risk appetite in the general marketplace today and strong gains in the cattle futures markets also supported buying interest in the hog futures. Good follow-through buying in hog futures on Tuesday would begin to suggest a near-term market bottom is in place.
The latest CME lean hog index is down another 55 cents at $90.05. Tuesday’s projected cash hog index is down 64 cents at $89.41. Today’s national direct 5-day rolling average cash hog price quote is $84.61. The noon report today showed pork cutout value rose a solid $3.45 to $102.43, led by gains in all cuts. Movement at midday was decent at 202.32 loads.
Technical analysis: December lean hog futures bears still have the overall near-term technical advantage. Prices are still in a six-week-old downtrend on the daily bar chart. However, more price gains this week would likely negate the price downtrend and suggest a market bottom is in place. The next upside price objective for the hog bulls is to close December futures prices above solid chart resistance at $85.00. The next downside price objective for the bears is closing prices below solid technical support at last week’s low of $78.80. First resistance is seen at today’s high of $83.15 and then at $84.00. First support is seen at $81.00 and then at today’s low of $80.00.
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 rose $7.20 to $228.55, near the daily high. January feeder cattle rose the daily trading limit of $9.25 to $328.825. Trading limits in both cattle futures markets will be expanded on Tuesday.
Fundamental analysis: The live and feeder cattle futures markets today saw heavy short covering and perceived bargain hunting after the markets late last week dropped to multi-month lows. Good follow-through price strength on Tuesday would be a technical clue that near-term market bottoms are in place.
Better risk appetite in the general marketplace today benefitted the cattle futures market bulls. U.S. lawmakers appear closer to reaching a deal to reopen the U.S. government. That rallied U.S. and global stock markets today.
USDA today reported cash cattle trading activity last week occurred at an average of $228.70. That’s down $2.16 from the week prior’s USDA average cash cattle trade of $230.86. The noon report today showed wholesale boxed beef cutout values higher, with Choice-grade up $1.83 to $378.23, while Select rose 95 cents to $362.04. Movement at midday was light at 37 loads. The Choice-Select spread is presently $16.19.
Technical analysis: The live and feeder cattle futures bears still have the overall near-term technical advantage. However, today’s strong price gains, if followed by good gains Tuesday, would begin to suggest near-term market bottoms are in place. But right now prices are still 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 $235.00. The next downside technical objective for the bears is closing prices below solid technical support at last week’s low of $219.075. First resistance is seen at $230.00 and then at $232.00. First support is seen at $226.00 and then at $225.00.
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 $311.40. First resistance is seen at $330.00 and then at $333.00. First support is seen at $320.00 and then at today’s low of $315.15.
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.