Hogs
Price action: February lean hogs rose 92 1/2 cents to $84.775, nearer the daily high.
Fundamental analysis: Lean hog futures saw fresh technical buying today. The near-term chart posture for the market remains bullish as prices are in an uptrend. Recent gains in the cash market and the CME hog index also suggest seasonal bottoms are in place for cash and futures markets. February lean hogs have pushed above the CME lean hog index, also a positive sign.
Mexico’s Economy Ministry has opened an anti-dumping probe into U.S. pork (legs and shoulders) imports. Meantime, China lowered its final tariffs on EU pork imports.
The latest CME lean hog index is up 19 cents to $82.99. Wednesday’s projected cash index price is up another 31 cents at $83.30. Today’s national direct 5-day rolling average cash hog price quote is $71.55. The noon report today showed pork cutout value down 47 cents to $98.42, led by losses in picnics and bellies. Movement at midday was 180.49 loads.
Technical analysis: February lean hog futures bulls still have the overall near-term technical advantage. Prices are trending up on the daily chart. The next upside price objective for the hog bulls is to close February futures prices above solid chart resistance at $87.00. The next downside price objective for the bears is closing prices below solid technical support at last week’s low of $80.65. First resistance is seen at last week’s high of $85.075 and then at $86.375. First support is seen at $83.00 and then at this week’s low of $82.40.
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 February in the cash market. You are hand-to-mouth for corn-for-feed needs. Be prepared to make additional purchases.
Cattle
Price action: February live cattle rose 15 cents to $230.70, near mid-range. January feeder cattle gained $3.40 to $343.325, nearer the session high and closed at a seven-week high close.
Fundamental analysis: The live cattle futures market is pausing this week after recent good gains, and this pause is not bearish. Feeder cattle futures today saw fresh chart-based buying interest amid a price uptrend in place on the daily bar chart. Solidly higher cash cattle trade last week at much better money is also supportive for the cattle futures markets.
USDA at midday today reported very light cash cattle trading at $228.00. The noon report today showed wholesale boxed beef cutout values firmer, with Choice-grade up 78 cents at $360.24, while Select-grade rose $1.73 to $349.03. Movement at midday was light at 48 loads. The Choice-Select spread is presently $11.21.
A short-term bout of bitter cold in the far northern Plains and southern Canada Prairies Wednesday and Thursday will induce blizzard conditions and a short-term (2-day) bout of bitter cold conditions, according to World Weather Inc.
Technical analysis: The live and feeder cattle futures bulls have the firm near-term technical advantage. Prices are trending up on the daily bar charts, suggesting the path of least resistance will remain sideways to higher in the near term. The next upside price objective for the live cattle bulls is to close February futures above resistance at $235.00. The next downside technical objective for the bears is closing prices below solid technical support at $225.00. First resistance is seen at last week’s high of $231.775 and then at $233.00. First support is seen at $228.70 and then at this week’s low of $225.65.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $348.175, which is the top of a downside price gap on the daily bar chart. The next downside price objective for the bears is to close prices below solid technical support at $330.00. First resistance is seen at last week’s high of $345.25 and then at $348.175. First support is seen at today’s low of $341.175 and then at this week’s low of $337.70.
What to do: Cover soymeal needs through February 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 February. You are hand-to-mouth for corn-for-feed needs. Be prepared to make additional purchases if value prices continue.