Hogs
Price action: February lean hogs fell 35 cents to $83.20, nearer the daily low and closed at a four-week-low close.
Fundamental analysis: Mild technical selling pressure from the speculators was featured today as prices are now trending lower on the daily chart, to suggest a market top is in place.
Cash hog market fundamentals are also deteriorating. February hog futures have erased their premium to the cash hog index, with prices presently at a 64-cent discount. The latest CME lean hog index is down 6 cents to $83.84 as of Dec. 13. Wednesday’s projected cash index price (for Dec. 16) is up 14 cents at $83.98. The national direct five-day rolling average cash hog price quote today is $80.04.
The noon pork report today showed pork cutout value fell 64 cents to $94.63, led by losses in hams and butts. Movement at midday was decent at 175.88 loads.
Technical analysis: The lean hog futures bulls are fading fast to suggest a market top is in place. Prices are now trending down on the daily bar chart. The next upside price objective for the hog bulls is to close February prices above solid chart resistance at the contract high of $89.60. The next downside price objective for the bears is closing prices below solid technical support at $80.00. First resistance is seen at today’s high of $84.40 and then at this week’s high of $86.60. First support is seen at the November low of $82.10 and then at $81.00.
What to do: Get current with feed coverage.
Hedgers: You have 50% of first-quarter production hedged in February $84.00 puts at $3.35.
Feed needs: You have all corn-for-feed needs covered in the cash market through the end of December. You have all soymeal needs in the cash market through the third week of January.
Cattle
Price action: February live cattle futures fell 22.5 cents to $189.75 while nearby December futures climbed 22.5 cents to $192.25. January feeder cattle futures surged $1.925 to $257.475 and settled nearer session highs.
Fundamental analysis: Live cattle futures saw modest followthrough selling pressure today, faring better than anticipated in the wake of yesterday’s breakdown. Discounts to the cash index were supportive to fats today, as both nearby December futures and February futures are trading well below last week’s cash average. Relative strength in feeder futures also likely limited losses in fats today, as feeders continue to be supported by delayed imports of cattle from Mexico, which has led to record-breaking strength in cash feeder cattle. That strength wavered in the most recent quote for the index, which is down 89 cents to $261.73. Cash cattle trade had a strong, albeit light, start to the week. Trade took place on Monday in Iowa at $195.50, up just shy of a dollar from last week’s average for the area. That could set the week for another week of higher cash trade, but weakness in futures could weigh on cash prices, especially if selling pressure persists as the week goes on.
Wholesale beef prices were mixed at midsession, with Choice climbing 43 cents to $317.80 and Select falling 53 cents to $289.04. That is the highest quote for Choice beef in over a month. Despite recent strength in beef prices, packer margins remain deep in the red.
Technical analysis: February live cattle futures saw modest selling pressure today. Bulls maintain the overall technical advantage. Prices were supported by 10-day moving average support at $189.50 today, which is bolstered by $189.00 then $187.75. Bulls are eyeing resistance at $190.10 then the recent for-the-move high close of $192.025.
January feeder futures made up a good portion of yesterday’s loss, though continue to trade largely sideways. Bulls maintain a slight technical advantage. Stiff resistance stands at $259.50, which is reinforced by the Dec. 2 high of $261.20. Tentative support lies at the 10-day moving average at $256.85, while firmer backing comes from $255.20.
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 the end of December. You have all soymeal needs in the cash market through the third week of January.