Hogs
Price action: February lean hogs fell 17.5 cents to $84.20, forging a mid-range close.
Fundamental analysis: Hog futures held an inside range throughout the session but rebounded from session lows as persisting strength in the cash index spurred some modest buying. Traders are largely anticipating an early seasonal low has been forged in the CME lean hog index, which has limited seller interest since Monday’s decline. Moreover, thin volume around Christmas and New Year holidays will likely lead to futures closely tracking the cash index into the New Year. Wholesale values in the noon report were stable, with cutout rising $1.31 to $95.93 amid gains in all cuts aside from primal picnics and bellies.
Technical analysis: February lean hogs were limited by Tuesday’s range, with initial resistance/support serving at the previous session high and low of $84.775 and $83.50. However, additional resistance stands at the 40- and 20-day moving averages of $85.26 and $85.42, respectively, while further support lies at $82.94 and $82.38.
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 surged $2.725 higher to $190.10 and closed near session highs. January feeder cattle futures rocketed $3.45 higher to $259.30. near session highs.
Fundamental Analysis: Cattle futures surged higher today, climbing into the middle of last week’s range after languishing near recent lows the past few days. Traders were encouraged by strength in the beef market, which saw Choice climb $3.84 to $319.82 at midsession, though that likely included some of Tuesday’s total, which USDA did not release at that time. Select climbed 98 cents to $287.73. Light cash cattle trade is expected this week at weaker levels as slaughter-counts are expected to be light. Only modest trade has taken place thus far, averaging $191.33, which is down sharply from $194.73 last week. This week’s trade is skewed somewhat lower by lower quality cattle trades hands at sharply lower levels. While the average for this week is currently $191.33, over 80% Choice animals were stronger at $193.77, down about a buck from last week.
Technical Analysis: February live cattle futures continue to trade sideways on the daily bar chart. Additional strength finds resistance at $190.50 which is backed by stiff resistance at $192.00. A resurgence in selling pressure finds tentative support at the psychological $190.00 mark while additional weakness finds support at $188.60, the 10-day moving average, then Tuesday’s low of $187.05.
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.