Hogs
Price action: October lean hogs rose 82 1/2 cents to $98.80, near the daily high and hit a contract high.
Fundamental analysis: The lean hog futures market was boosted today by strong gains in the cattle futures and a rebound in fresh pork prices. Technical buying was featured as lean hogs remain in a solid price uptrend on the daily bar chart, with no strong chart clues of a market top being close at hand.
The latest CME lean hog index is down 36 cents at $105.34. Tuesday’s projected cash hog index is down another 36 cents at $104.98. Today’s national direct 5-day rolling average cash hog price quote is $105.80. The noon report today showed pork cutout value up $1.74 to $113.79, led by gains in picnics, loins and bellies. Movement at midday was 155.12 loads.
Technical analysis: October lean hog futures bulls have the solid overall near-term technical advantage. A choppy, 2.5-month-old price uptrend remains in place on the daily bar chart. The next upside price objective for the hog bulls is to close October futures prices above solid chart resistance at $100.00. The next downside price objective for the bears is closing prices below solid technical support at $95.00. First resistance is seen at today’s contract high of $98.95 and then at $100.00. First support is seen at today’s low of $97.90 and then at $97.00
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 September in the cash market, with half coverage for October, November and December. For corn, you now have all needs through October covered in the cash market.
Cattle
Price action: October live cattle rose $3.575 to $237.15, nearer the daily high and hit a three-week high. November feeder cattle rose $8.975 to $359.90, near the daily high and hit a three-week high. November feeders traded limit up for a time today. Live and feeder cattle futures trading limits will be expanded Tuesday with the limit-up close in January feeders.
Fundamental analysis: The “never-say-die” cattle market bulls are once again showing good power, as cattle traders were reminded in Friday afternoon’s USDA Cattle-on-Feed Report that tight cattle supplies persist. Placements in feedlots in August were down 10% from the same time one year-ago, while marketings were the lowest for August since the series began in 1996.
Feeder cattle futures were lifted sharply today as USDA over the weekend confirmed a new case of New World screwworm (NWS) in northern Mexico-- just 70 miles from the U.S.-Mexico border and is now the northernmost detection of NWS during the outbreak.
Last week’s cash cattle trading average price was $237.51, USDA reported at midday. The prior week’s cash cattle trade averaged $239.33. The noon report today showed wholesale boxed beef cutout values firmer, with Choice-grade up 35 cents to $382.40, while Select rose $2.42 to $362.34. Movement at midday was 67 loads. The Choice-Select spread is presently $20.06.
Technical analysis: The live and feeder cattle bulls have the near-term technical advantage. The next upside price objective for the live cattle bulls is to close October futures above resistance at the contract high of $242.075. The next downside technical objective for the bears is closing prices below solid technical support at the September low of $228.80. First resistance is seen at today’s high of $237.80 and then at $239.00. First support is seen at today’s low of $233.90 and then at $232.00.
The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at the contract high of $367.65. The next downside price objective for the bears is to close prices below solid technical support at last week’s low of $342.125. First resistance is seen at $362.00 and then at $364.00. First support is seen at $358.00 and then at $356.00.
What to do: Get current with feed coverage. Carry all production risk in the cash market for now.
Hedgers: Carry all production risk in the cash market for now.
Feed needs: For soymeal, you have full coverage in cash through July, with half of your needs for August, September, October, November and December covered in cash. For corn, you have all needs through August covered in the cash market, with half of your needs for September and October covered in cash.