Hogs
Price action: Hog futures fell sharply Monday, with nearby February futures tumbling $2.525 to $81.625.
Fundamental analysis: Anticipation of short-term weakness seemed to undercut hog futures badly Monday, possibly reflecting some year-end profit-taking and a belated bearish response to the Dec. 23 USDA Hogs & Pigs report. That implied hog supplies will remain below year-ago levels into January, then run about 1% over early-2024 levels from midwinter into spring. The farrowing, litter size and intentions data suggest larger supply increases for the second-half of 2025. That same day’s Cold Storage report seemed somewhat supportive of the winter hog/pork outlook, especially with ending-November pork belly stocks falling well below year-ago levels.
The CME officially stated the Dec. 26 quote for the CME lean hog index at $84.85 this morning, matching expectations. That marked a daily decline of 25 cents. Today’s USDA data indicates last Friday’s quote will fall another 50 cents to $84.35 when published tomorrow. Pork cutout remained firm last week and again this morning, rising 77 cents to $95.84. This is partially reflective of changing industry practices and tendencies from the past, when diving ham prices formerly tended to plunge during the second half of December (after grocers had completed wholesale purchases for holiday dinner entrees). The current firmness implies considerable demand strength, although a belated seasonal breakdown can’t be ruled out. Today’s futures selloff seemingly points in the same direction.
Technical analysis: Today’s breakdown in February lean hog futures clearly gave bearish traders the short-term technical advantage. The dive below tentative support at the 10-day moving average of $83.60 made that level tentative resistance. Look for initial resistance at the Dec. 12 low of $82.675. Pivotal resistance stands at the confluence of the contract’s 20- and 40-day moving averages between $84.87 and $85.07, respectively. Today’s low of $80.90 reflects initial support. That’s backed by substantial psychological support at the $80.00 level.
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 fell 35 cents to $190.30 and nearer the session low. January feeder cattle rose 25 cents to $261.625, nearer the session high and hit a six-month high today.
Fundamental analysis: A bit worrisome for the cattle market bulls to start the trading week is that cattle futures markets today got little to no price support from stronger cash cattle trade last week, along with good gains in wholesale beef prices recently. Wholesale boxed beef prices at present have reached record highs for this time of year.
Last week’s average cash cattle trading price was $194.81, up 8 cents from the week prior. We look for cash cattle prices this week to come in at least steady, but likely in a light test due to the New Year holiday Wednesday and a lighter kill week. Cold, snowy weather starting the second weekend in January will be closely monitored by the industry, as the potential exists for a bigger winter storm hitting cattle country around January 12.
The noon report today showed wholesale boxed beef values higher again, with Choice up $3.00 to $325.88 and Select gaining $2.96 to $294.09. The Choice-Select spread is presently $31.29. Movement at midday was light at 26 loads.
Technical analysis: The next upside price objective for the live cattle bulls is to close February futures above solid resistance at the December high of $193.225. The next downside technical objective for the bears is closing prices below solid technical support at the December low of $186.275. First resistance is seen at today’s high of $191.60 and then at $193.225. First support is seen at Friday’s low of $189.725 and then at $188.00.
The feeder cattle bulls have the firm overall near-term technical advantage. The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at the May high of $263.425. The next downside price objective for the bears is to close prices below solid technical support at the December low of $253.80. First resistance is seen at $262.50 and then at $263.425. First support is seen at today’s low of $259.90 and then at Friday’s low of $258.775.
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.