Hogs
Price action: Hog futures surged to start the week, with nearby April futures jumping $1.45 to $88.075.
Fundamental analysis: Last week’s late cash market slippage continued into the weekend. The latest official quote for the CME lean hog index slipped three cents to $89.74 as of last Thursday. Last Friday’s preliminary figure fell 46 cents to $89.28. However, the wholesale market exhibited fresh strength this morning. Pork cutout repeated last week’s pattern of big morning gains followed by an afternoon setback. Today’s midsession quote suggested more of the same. Cutout jumped $3.55 to $100.93 at noon after having ended Friday just 9 cents higher at $97.38. We remain cautiously optimistic about the short-term hog/pork outlook.
It was rather surprising to see futures surge as they did today, especially after last week’s slaughter broke the string of year-to-year reductions begun in late January, with the preliminary total up about 2.5% above year-ago. The latest trade news didn’t seem particularly supportive, but the broad market advance, which included the equity indexes and crude oil, as well as cattle and wheat, suggests the markets are more confident about the outcome of the various trade/tariff conflicts.
Technical analysis: Bears own a slight short-term technical advantage in April lean hog futures due to the fact that bulls couldn’t overcome resistance at the pivotal 40-day moving average near $88.67 today. Initial resistance at that point is backed by psychological resistance at the $90.00 level, then by Jan.-Feb. highs around $92.50. Look for a range of solid support starting at today’s low of $87.15. That includes the chart gap extending down to last Friday’s high of $87.075, the $87.00 level, then the contract’s 20- and 10-day moving averages at $86.81 and $86.29. Psychological support persists at the $85.00 level.
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 $1.85 to $205.025, near the session high and hit a six-week high. May feeder cattle rose $2.65 to $285.30, near the daily high and hit another contract high.
Fundamental analysis: The live and feeder cattle futures markets today were supported by follow-through technical buying interest as the charts are firmly bullish, and by better buying interest as risk appetite was a bit keener to start the trading week.
Cattle and beef market fundamentals remain bullish. Lighter cash cattle trade last week averaged $205.30, up $5.00 on the week. Cash trade this week is likely to be pushed to late into the week again given the monthly USDA Cattle on Feed Report on Friday afternoon. We expect higher cash cattle prices again this week. The noon report today showed wholesale boxed beef values higher, with Choice surging $6.19 to $324.46, while Select gained $1.75 to $308.07. Movement at midday was light at 37 loads. The Choice-Select spread is presently $16.39.
Cattle traders and producers are watching weather in the Plains states this week. World Weather Inc. today said that in the Plains states “widely swinging temperatures, excessive wind and blowing dust along with very low humidity and limited precipitation” will stress livestock.“ Some of these wind gusts will be as high as 55 to 75 mph. A blizzard is likely late Tuesday into Wednesday from part of central Kansas through central and southeastern Nebraska which will lead to more notable livestock stress and more travel issues.
Fundamental analysis: Live cattle futures bulls have the solid 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 $207.725. The next downside technical objective for the bears is closing prices below solid technical support at $197.50. First resistance is seen at $206.00 and then at $207.00. First support is seen at today’s low of $203.15 and then at $202.00.
The next upside price objective for the feeder bulls is to close May futures prices above technical resistance at $290.00. 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 contract high of $285.55 and then at $287.00. First support is seen at today’s low of $282.525 and then at $281.00.
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.