Hogs
Price action: February lean hog futures rose $1.075 to $85.875, nearer the session high.
Fundamental analysis: Lean hog futures saw technical buying interest today as prices are trending up and near the recent 2.5-month high. Seasonal factors suggest hog slaughter levels will decline into spring, which is price-friendly for the cash hog and lean hog futures markets for the next few months. The February lean hog futures contract is above the latest CME lean hog index, which is also bullish for futures.
The latest CME lean hog index is down 29 cents to $81.25. Friday’s projected cash index price is down another 27 cents at $80.98. Today’s national direct 5-day rolling average cash hog price quote was not available. The noon report today showed pork cutout value down 93 cents at $91.36, led by losses in picnics. Movement at midday was good at 181.88 loads.
Technical analysis: February lean hog futures bulls 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 $89.00. The next downside price objective for the bears is closing prices below solid technical support at $82.40. First resistance is seen at this week’s high of $86.45 and then at $87.50. First support is seen at today’s low of $84.80 and then at last week’s low of $83.925.
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 March in the cash market. You should also have corn-for-feed needs purchased through February. Be prepared to make additional purchases.
Cattle
Price action: February live cattle rose 75 cents to $235.275, nearer the daily high. March feeder cattle gained $2.225 to $357.725, nearer the session high.
Fundamental analysis: The cattle futures markets today saw more technical buying strength as prices are trending higher and this week have hit a 10-week high. Beef packer margins that are presently in the red did somewhat limit buying interest in live cattle futures today. However, the overall supply and demand balance is firmly tilted to the bullish camp, amid historically tight supplies of cattle on U.S. feedlots and Mexican cattle banned from entering the U.S. due to the New World Screwworm parasite.
USDA today reported very light cash cattle trading taking place so far this week, with steers fetching an average price of $228.60 and heifers $232.00. Last week’s average cash cattle trade was at $231.68. The noon report today showed wholesale boxed beef cutout values solidly up, with Choice-grade up $2.42 at $356.70, while Select-grade gained $2.47 to $351.75. Movement at midday was solid at 115 loads. The Choice-Select spread is $4.95.
Technical analysis: The live and feeder cattle futures bulls have the firm overall near-term technical advantage. Price uptrends are in place on the daily bar charts. The next upside price objective for the live cattle bulls is to close February futures above resistance at $240.375, which is the top of a downside price gap on the daily bar chart. The next downside technical objective for the bears is closing prices below solid technical support at $226.85. First resistance is seen at Wednesday’s high of $236.225 and then at this week’s high of $237.45. First support is seen at today’s low of $233.125 and then at $232.00.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at $370.00. The next downside price objective for the bears is to close prices below solid technical support at $343.00. First resistance is seen at this week’s high of $359.35 and then at $361.00. First support is seen at today’s low of $353.35 and then at $350.00.
What to do: Cover corn-for-feed 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 March. You have corn-for-feed needs covered through February as well. Be prepared to make additional purchases if value prices continue.