Hogs
Price action: April lean hogs rose 95 cents to $86.65, near mid-range. June hogs gained 45 cents to $96.25.
Fundamental analysis: The lean hog futures market saw more chart consolidation amid a choppy and sideways market recently. The narrowing discount April futures hold to the cash index did limit selling interest today. April lean hogs are presently seeing a just over $2.00 discount to the cash index. The latest CME lean hog index dropped 9 cents to $88.79 as of March 21. Wednesday’s cash index quote is projected up 11 cents at $88.90. The national direct five-day rolling average cash hog price quote today is $88.97. The noon report today showed pork cutout value rose another $2.99 to $100.36, led by solid gains in bellies. Movement at midday was good at 187.67 loads.
Hog futures traders will closely examine this afternoon’s monthly USDA Cold Storage report.
Technical analysis: Lean hog futures bulls and bears are on a level overall near-term technical playing field amid recent choppy trading. The next upside price objective for the hog bulls is to close April prices above solid chart resistance at the March high of $88.60. The next downside price objective for the bears is closing prices below solid technical support at $83.00. First resistance is seen at today’s high of $87.10 and then at $88.00. First support is seen at last week’s low of $85.225 and then at $84.00.
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: June live cattle futures inched 17.5 cents higher to $202.325 while nearby April futures climbed 47.5 cents to $206.375. May feeder cattle futures fell 72.5 cents to $284.125 while expiring March futures posted modest gains.
Fundamental analysis: Cattle futures saw action on either side of unchanged today before closing modestly higher. The battle between technical and fundamental driven traders continues. The outlooks for each have diverged in the past few days as technicals have turned more bearish following Friday’s reversal from contract highs and yesterday’s followthrough selling while cash cattle prices averaged a record last week. Technical traders are likely looking to packer margins, expecting packers to hold off on bids in an effort to wait out for lower prices as cutting margins remain deep in the red. On the other hand, consumer demand for beef remains robust, despite grocers hiking prices earlier in the year. That demand continues to underpin the cattle market and is helping beef cutout move higher. While cutout has been firming, it has not done enough to offset the strength seen in cash cattle. Choice cutout surged $6.93 to $334.03 at midsession, which would be the highest quote since the mid-January peak if sustained through afternoon trade. Select inched 11 cents higher to $313.69 this morning.
Technical analysis: June live cattle futures staged an impressive reversal after trading just below $200.00 in early trade. Bulls retain the technical advantage and are looking to challenge last Thursday’s for-the-move high close at $205.025 before tackling the contract high of $207.30. Initial support lies at $201.825 and is reinforced by the 10-day moving average at $200.95, then $200.00, which capped losses today.
May feeder cattle futures saw modest followthrough selling today though closed well off session lows. Bulls retain the near-term technical advantage still as they look to challenge resistance at $286.55 before tackling the contract high close at $289.10. Support comes in at $283.75 then today’s low of $280.70.
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.