Hogs
Price action: April lean hog futures closed limit down today, falling $4.00 to $86.35. Nearby February futures inched 15 cents higher to $84.325.
Fundamental analysis: Lean hog futures underwent heavy selling pressure today as woes surrounding eventual tariffs on hog imports weighed heavily on the market today. April futures closed limit down as a potential downturn in exports to Mexico, who makes up for over 25% of U.S. pork exports, would lead to abundant domestic supplies, weighed heavily on futures. President Trump and Mexico’s president Sheinbaum agreed to push any implementation of tariffs back to March 1, though traders are confident that no further agreement will be made ahead of that time. February lean hog futures were supported by continued strength in the cash index as the CME lean hog index is up another 42 cents to $83.48 as of Jan. 30, extending the seasonal climb. The preliminary calculation puts the index up another 29 cents to $83.77 tomorrow. Pork cutout continues to work higher as well, rising 43 cents to $95.18 at midsession. Bellies continue to lead strength, rising $9.52 at midsession.
Technical analysis: April lean hog futures underwent heavy selling pressure today and closed limit down. Lean hog futures continue to see volatile trade. Even with today’s limit lower close, bulls retain a slight technical advantage, though any followthrough selling quickly negates that advantage. Initial support lies at $86.00 , which is backed by the 200-day moving average at $85.35. Continued selling finds support at the January low of $84.50. Resistance comes in at $87.05 then $88.70, the 40-day moving average, on resurgent strength.
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 the end of February. You are hand-to-mouth on corn-for-feed needs.
Cattle
Price action: April live cattle fell $2.15 to $200.15, nearer the session low. March feeder cattle fell $5.225 to $270.50, nearer the session low.
Fundamental analysis: The cattle futures markets were hit hard today by a “risk-off” trader mentality to start the trading week. New U.S. tariffs against major U.S. trading partners spooked the stock market bulls and prompted heightened concerns regarding U.S. ag products being targeted for retaliation. Profit taking and weak long liquidation by the speculators were also featured today after the cattle futures markets last week hit contract and all-time highs. Feeder cattle futures were pressured today as USDA over the weekend said cattle and bison imports from Mexico into the U.S. will resume in the coming days, following a temporary suspension due to a New World screwworm (NWS) outbreak.
Cash cattle trade last week averaged up 38 cents to $209.57, another all-time high for the fifth straight week and the 11th straight week of price gains in the average. We would not be surprised to see cash cattle trade higher again this week.
The noon report today showed wholesale boxed beef values rose, with Choice up $3.55 to $331.23, while Select rose $3.74 to $320.91. Movement at midday was light at 40 loads. The Choice-Select spread is currently $10.42.
USDA Friday afternoon estimated there were 86.662 million head of cattle in the U.S. as of Jan. 1, down 495,000 head (0.6%) from last year and the lowest since 1951. The annual inventory report came in mostly as traders expected.
Technical analysis: Live and feeder cattle futures bulls still have the overall near-term technical advantage as prices are still in 2.5-month-old uptrends on the daily bar charts. However, the bulls are fading and recent price action begins to suggest the bulls are exhausted and market tops may be in place. The next upside price objective for the live cattle bulls is to close April futures above solid resistance at last week’s contract high of $207.725. The next downside technical objective for the bears is closing prices below solid technical support at $195.00. First resistance is seen at $202.00 and then at today’s high of $203.275. First support is seen at today’s low of $199.525 and then at $198.00.
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 $263.00. First resistance is seen at $272.50 and then at $275.00. First support is seen at $269.00 and then at $268.00.
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 the end of February. You are hand-to-mouth on corn-for-feed needs.