Hogs
Price action: April lean hog futures fell 27.5 cents to $87.40 and closed on session lows.
Fundamental analysis: April lean hog futures opened higher this morning but struggled to maintain early gains as the session went on. Weakness in the CME lean hog index has undercut hog futures the past couple of sessions. The index is down 69 cents to $90.53 as of Feb. 20, which put an end to the recent string of gains. The preliminary calculation puts the index down another 85 cents to $89.68 tomorrow. Traders anticipate recent weakness in the cash market will continue as April futures finished the day more than $2.00 below tomorrow’s quote for the index. The strength in pork cutout seen on Friday continued into this morning’s trade, as cutout climbed another $1.84 to $98.91 at midsession, led by strength in bellies and butts, though all cuts except ribs posted gains this morning.
Technical analysis: April lean hog futures closed lower for the fourth consecutive session as bears retain a slight technical advantage. Prices continue to face heightened volatility and are in the lower end of the range that has capped price action since late December. Continued selling pressure finds support at $86.70, which is quickly reinforced by support at $86.35. Bulls are seeking to retake resistance at $88.00 before tackling stiff resistance at $89.80, the 40-day moving average.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You should have all soymeal needs covered in the cash market through March. You are hand-to-mouth on corn-for-feed needs.
Cattle
Price action: April live cattle rose $1.15 to $195.10 and nearer the session high. March feeder cattle gained $4.35 to $272.30, near the session high and hit a three-week high.
Fundamental analysis: The cattle futures markets today saw short covering and corrective buying following recent losses. Feeder cattle futures prices were supported today by the solid losses in corn futures. Last Friday’s USDA Cattle-on-Feed report had little impact on today’s cattle futures trade, as the numbers came in close to trade expectations for each category.
Cash cattle prices fell again last week, with the average cash trade down $3.27 at $199.64, marking the third straight week of lower cash trade. The noon report today showed Choice-grade boxed beef cutout value up $2.97 to $313.74. Select cutout rose $1.07 to $303.63. Beef packer margins remain in the red. Movement at midday was light at 35 loads. The Choice-Select spread is currently $10.11.
Technical analysis: Live cattle futures bears have the near-term technical advantage. Prices are trending down on the daily bar charts. The next upside price objective for the live cattle bulls is to close April futures above solid resistance at $200.00. The next downside technical objective for the bears is closing prices below solid technical support at $190.00. First resistance is seen at $197.00 and then at $198.00. First support is seen at today’s low of $193.875 and then at last week’s low of $193.025.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at the contract high of $279.825. The next downside price objective for the bears is to close prices below solid technical support at the February low of $263.15. First resistance is seen at $273.00 and then at $274.00. First support is seen at $270.00 and then at today’s low of $268.10.
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 should have all soymeal needs covered in the cash market through March. You are hand-to-mouth on corn-for-feed needs.