Hogs
Price action: February lean hog futures fell 5 cents to $84.475, nearer the session low.
Fundamental analysis: Lean hog futures today saw a post-holiday pause. Buying interest was limited by a risk-off day in most of the raw commodity sector. Recently rising cash hog prices and a bullish near-term chart posture for the futures market had supported lean hog futures but now the cash market gains are stalling out. The February futures contract is above the latest CME lean hog index, which is bullish for futures.
The latest CME lean hog index is up 13 cents to $83.84. Tuesday’s projected cash index price is down $1.40 at $82.44. Today’s national direct 5-day rolling average cash hog price quote is $68.02. The noon report today showed pork cutout value down $2.00 at $95.71, led by losses in bellies. Movement at midday was light at 106.80 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 $87.00. The next downside price objective for the bears is closing prices below solid technical support at $82.40. First resistance is seen at today’s high of $85.225 and then at $87.00. First support is seen at last week’s low of $83.825 and then at this $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 should also have corn-for-feed needs purchased through February. Be prepared to make additional purchases.
Cattle
Price action: February live cattle fell 67 1/2 cents to $228.975, nearer the daily low. January feeder cattle gained 82 1/2 cents to $347.00, near mid-range and hit a nine-week high early on.
Fundamental analysis: The live cattle futures market today saw some mild profit taking, with buying interest limited by a general risk-off mentality in most of the raw commodity markets, as gold and silver saw some of the biggest one-day price losses in their trading history—spilling over into selling interest in other commodity markets. Feeder cattle futures saw some technical buying from the speculators today as the near-term chart posture for feeders favors the bulls.
World Weather Inc. today said travel conditions will slowly improve in the upper Midwest today and Tuesday after the recent blizzard which should wind down by Tuesday morning. Livestock stress will remain. Cold weather and additional bouts of light snow will impact the northeast half of the Midwest Tuesday into Friday of this week, maintaining some stressful winter conditions for livestock.
USDA today reported last week’s average cash cattle trade at $229.33—up $1.36 from the week prior. The noon report today showed wholesale boxed beef cutout values higher, with Choice-grade up $1.57 at $352.78, while Select-grade gained $2.95 to $346.75. Movement at midday was light at 45 loads. The Choice-Select spread has narrowed to $6.03.
Technical analysis: The live and feeder cattle futures bulls still have the 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 $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 today’s high of $231.00 and then at last week’s high of $232.325. First support is seen at $228.00 and then at $226.85.
The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at $356.875, 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 $337.00. First resistance is seen at today’s high of $349.55 and then at $350.00. First support is seen at today’s low of $344.775 and then at $342.00.
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 February. You have corn-for-feed needs covered through February as well. Be prepared to make additional purchases if value prices continue.