Hogs
Price action: June lean hogs fell $1.675 to $95.80 and closed nearer session lows, while nearby April futures sunk 42.5 cents to $85.70.
Fundamental analysis: Lean hog futures gave up most of Friday’s gain as bulls struggle building much momentum amid a weakening lean hog index. April lean hogs continue to trade near the lower end of the recent sideways range, maintaining a discount to the cash market as the index continues to see moderate losses day to day. The CME lean hog index is down another 32 cents to $88.88 as of March 20. The preliminary calculation puts the index down another 9 cents to $88.79 tomorrow, which would be a fresh for-the-move low. Pork cutout continues to bounce between $95.00 support and $100.00 resistance. While the strength above the $95.00 mark has been supportive, bulls have been discouraged by the lack of grocer demand as prices are near that mark. Meanwhile, ham demand should be picking up as grocers begin stockpiling hams for upcoming Easter specials. Cutout rose $1.53 at midsession to $98.39, led by strength in picnics and bellies, though all cuts but hams posted gains this morning.
Technical analysis: June lean hogs saw persistent selling pressure today as prices gave up all of Friday’s gain. Bears retain a modest technical advantage as prices are trending lower from the mid-February highs. Initial support comes in at $95.00, which capped most of the downside today. Additional selling targets the March 4 for-the-move low close at $93.15. Bulls are looking to tackle initial resistance at $96.50 before challenging 10-day moving average resistance 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 have all corn-for-feed needs covered in the cash market through March. You have all soymeal needs covered in the cash market through April.
Cattle
Price action: April live cattle fell $1.05 to $205.90 and near the daily low. May feeder cattle lost 25 cents to $284.85, nearer the session low.
Fundamental analysis: The cattle futures markets today saw follow-through selling pressure and some chart consolidation following Friday’s losses. Friday’s and today’s price action suggest the cattle futures markets bulls have become exhausted. Selling interest in the cattle markets today was limited by better risk appetite in the general marketplace as the U.S. stock indexes posted strong gains.
Last Friday’s USDA cattle-on-feed report showed the March 1 feedlot inventory down 2.1% from year-ago at 11.577 million head, placements down 17.8% from a year ago during February and marketings down 8.9%. The report was friendly for cattle prices but not unexpected by traders.
Last week’s average cash cattle trading price was $212.76, a record high and up $7.46 from the week prior. The noon report today showed Choice-grade boxed beef fell 13 cents to $325.32, while Select rose $2.16 to $311.78. Movement at midday was light at 42 loads. The Choice-Select spread is presently $13.54.
Technical analysis: Live and feeder cattle futures bulls still have the firm overall near-term technical advantage. Prices are trending higher on the daily bar charts. The next upside price objective for the live cattle bulls is to close April futures above solid resistance at the contract high of $211.125. The next downside technical objective for the bears is closing prices below solid technical support at $200.00. First resistance is seen at today’s high of $209.05 and then at $210.00. First support is seen at $206.00 and then at $205.00.
May feeder cattle futures on Friday scored a bearish “key reversal” down on the daily chart, which is one clue that a market top is in place. The next upside price objective for the feeder bulls is to close May futures prices above technical resistance at $295.00. The next downside price objective for the bears is to close prices below solid technical support at $277.225. First resistance is seen at today’s high of $288.65 and then at $290.00. First support is seen at today’s low of $283.325 and then at $282.00.
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: You have all corn-for-feed needs covered in the cash market through March. You have all soymeal needs covered in the cash market through April.