Hogs
Price action: April lean hogs fell $1.75 to $86.55, near the daily low.
Fundamental analysis: The lean hog futures market today saw a corrective pullback and some profit taking from the shorter-term speculators, following recent good gains. Weakening cash hog market fundamentals also limited buying interest in futures today. The latest CME lean hog index is down another 19 cents to $89.71 as of March 7, marking the fourth straight daily decline. Wednesday’s projected cash index price is down another penny at $89.70. The national direct five-day rolling average cash hog price quote today is $88.90. The noon report today showed pork cutout up 80 cents to $99.02, led by gains in ribs. Movement at midday was good at 206.29 loads. Pork cutout continues to struggle as consumer demand wanes seasonally, just ahead of the spring grilling season.
Technical analysis: Lean hog futures bulls and bears are on a level overall near-term technical playing field. A bullish V-Bottom reversal pattern on the daily chart has killed the price downtrend. The next upside price objective for the hog bulls is to close April prices above solid chart resistance at $90.00. The next downside price objective for the bears is closing prices below solid technical support at the March low of $80.725. First resistance is seen at this week’s high of $88.425 and then at $89.00. First support is seen at $86.00 and then at $85.00.
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 futures slid $1.025 to $199.55 and closed nearer session lows. April feeder cattle fell 22.5 cents to $277.70.
Fundamental analysis: Cattle futures saw modest selling pressure today as uncertainty persists in cash fundamentals. The overall risk-off tone in the marketplace also has traders looking for opportunities to reduce risk exposure across the marketplace as well as S&P futures continue to undergo heavy selling pressure, now down 10% from the all-time highs seen earlier this year. Considering funds heavy positioning across cattle, some shoring up of positions could lead to additional selling pressure. After ending a four-week losing streak last week, cash cattle trade has had a slow start to the week.
Considering packer margins remain deep in the red, they will likely push negotiations late into the week. Traders are likely to keep a close eye on the cash market, seeking direction, which could lead to choppy trade here in the next few days. Wholesale beef surged higher this morning as Choice cutout climbed $4.74 to $322.32. Select was not far behind, rising $2.54 to $309.49. If sustained through the afternoon, that would mark the highest quote for Choice cutout since Feb. 11.
Feeder futures saw modest selling pressure today. Futures and the feeder cattle index have seen somewhat of a divergence recently as the index has seen persistent weakness, falling below futures. The most recent quote for the index is up 18 cents to $273.95, about $3.00 below nearby futures.
Technical analysis: April live cattle futures saw an increase in selling pressure, falling back into Friday’s range. Bulls maintain a slight technical advantage. Psychological resistance stands at the psychological $200.00 mark, though bulls are ultimately looking to close prices above resistance at $201.30. Prior resistance, now support at $199.40 limited losses today, while additional selling finds support at $198.125, though bears are ultimately looking to challenge 10-day moving average support at $197.35.
April feeder cattle futures made a fresh contract high today before facing profit-taking. Bulls maintain a slight technical advantage and are looking to overcome resistance at $278.15 before challenging today’s high of $280.30. Support comes in at $276.00, which is reinforced by the 10-day moving average at $275.15.
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.