Hogs
Price action: April lean hog futures closed 95 cents higher at $88.30 and closed near session highs.
Fundamental analysis: April lean hog futures worked higher for the fourth consecutive session as rebounding pork cutout continues to support futures. Pork cutout pushed back above the $100.00 mark at midsession as it rose $1.81 to $100.17, led by strength in hams and picnics. In the past month, cutout has ended above $100.00 just four times. A sustained move above that mark would likely help support the floundering CME lean hog index, which is stuck near $90.00. The index is down 28 cents to $89.90 as of March 6. The preliminary calculation puts the index down another 19 cents to $89.71 tomorrow, which would be the lowest quote since Feb. 27. April lean hog futures have shored up discounts to the index over the past week, but unless the index shows some strength soon, bears could look to take back hold of the market.
Technical analysis: April lean hog futures closed higher for the fourth consecutive session today as bulls challenged 40-day moving average resistance. That mark will stand as bulls initial target at $88.20, while continued buying eyes resistance at $90.00. Support comes in at $87.50 then the 10-day moving average at $86.50 on any reversal lower.
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 rose 30 cents to $200.575, near mid-range and hit a five-week high. May feeder cattle rose 35 cents to $278.55, nearer the session high and hit a contract high.
Fundamental analysis: The cattle futures markets saw modest follow-through buying interest from the chart-based speculators today following strong gains posted Friday. Cattle traders today also brushed off a general “risk-off” mentality in the marketplace as the U.S. stock market suffered another strong down day, with the major indexes hitting multi-month lows. However, if the stock indexes continue to sell off this week, it’s likely buyer interest in cattle futures would be squelched.
The recent strength in cattle futures is likely to encourage feedlots to hold out for higher cash cattle bids this week. Last week’s average cash cattle trade came in up $2.63 at $200.28, ending a four-week losing streak for average weekly trade. Today’s noon report showed wholesale beef values rose, with Choice-grade up $1.42 to $316.32, while Select rose $1.20 to $307.00. Movement at midday was 49 loads. The Choice-Select spread is currently $9.32.
Technical analysis: Live cattle futures bulls have the overall near-term technical advantage. The next upside price objective for the live cattle bulls is to close April futures above solid resistance at the contract high of $207.725. The next downside technical objective for the bears is closing prices below solid technical support at the March low of $189.50. First resistance is seen at today’s high of $201.65 and then at $203.00. First support is seen at $199.00 and then at $198.00.
Feeder bulls have the solid near-term technical advantage. The next upside price objective for the feeder bulls is to close May futures prices above technical resistance at $285.00. The next downside price objective for the bears is to close prices below solid technical support at the March low of $265.20. First resistance is seen at $280.00 and then at $281.00. First support is seen at $277.00 and then at $275.00.
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.