Hogs
Price action: December lean hogs fell 42 1/2 cents to $82.35, near the daily low.
Fundamental analysis: Lean hog futures today saw a pause after Monday’s solid gains that pushed prices to a three-week high. Improved risk appetite in the general marketplace early this week and strong gains in the cattle futures markets have also supported buying interest in the hog futures. More upside price action Wednesday in hog futures would begin to suggest a near-term market bottom is in place.
The latest CME lean hog index is down another 64 cents at $89.41. Wednesday’s projected cash hog index is down 24 cents at $89.17. Today’s national direct 5-day rolling average cash hog price quote is $84.51. The noon report today showed pork cutout value down 66 cents to $99.56, led by losses in butts. Movement at midday was decent at 202.18 loads.
Technical analysis: December lean hog futures bears still have the slight overall near-term technical advantage. However, a six-week-old downtrend on the daily bar chart has been negated to 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 $83.25 and then at $84.00. First support is seen at $82.00 and then at $81.00.
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 $1.35 to $227.20, nearer the daily low. January feeder cattle rose 32 1/2 cents to $329.15 and nearer the daily low.
Fundamental analysis: The live and feeder cattle futures markets today saw some mild to moderate losses, but still not a bad day for the bulls following Monday’s strong to limit-up price gains. This week’s price strength in live and feeder cattle futures begins to suggest near-term market bottoms are in place. Steady-to-higher price action in cattle futures the rest of this week would better suggest such.
Improved risk appetite in the general marketplace this week has also benefitted the cattle futures market bulls. U.S. lawmakers appear very close to reaching a deal to reopen the U.S. government as soon as the next couple days.
Cash cattle trading this week has been very light so far, with USDA at midday reporting the average steer price at $228.00 and the average heifer price at $228.48. USDA Monday 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 $3.10 to $380.42, while Select rose 70 cents to $360.40. Movement at midday was 67 loads. The Choice-Select spread is presently $20.02.
Technical analysis: The live and feeder cattle futures bears still have the overall near-term technical advantage. However, this week’s price gains 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 today’s high of $229.60 and then at $232.50. First support is seen at today’s low of $226.275 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 today’s high of $333.475 and then at $335.00. First support is seen at $328.00 and then at $325.00.
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.