Hogs
Price action: June lean hog futures surged $1.80 to $95.125 and closed near session highs. April futures expired a nickel higher at $85.475.
Fundamental analysis: June lean hog futures surged higher again today, marking gains for the fourth consecutive session as strength in cattle helped lift hogs today. April lean hogs went off the board at noon CDT, rising a nickel to $85.475. April futures will settle against the CME lean hog index quote for today, released on Wednesday. The index is down 81 cents to $86.86 as of April 10, a fresh for-the-move low. The preliminary calculation puts the index down another 86 cents to $86.00 tomorrow. April futures indicate traders’ belief the index will continue to slide into mid-week. Summer futures are quickly building premiums over the cash market, though it is key to remember that premiums were historically tight last week and recent strength can be chalked up to corrective buying. Traders could be encouraged by resurgent strength in cutout. After breaking down last week, cutout has rebounded, notably on strong movement. Cutout rose $2.26 Friday on movement totaling an impressive 430.92 loads. Cutout was up another $2.44 at midsession today to $94.40, led by a $9.55 jump in primal bellies.
Technical analysis: June lean hog futures saw strong gains again today and closed above key resistance. Bears maintain a slight technical advantage, which looks to be tested soon. Bulls overcame the 20-day moving average today, which now marks support at $94.60. Selling below that mark looks to overcome support at $93.15. Bulls next objective stands at $95.50, which was firm support before the April 4 breakdown. Continued strength challenges resistance at $96.30, 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 have all corn-for-feed needs covered in the cash market through April. You have all soymeal needs covered in the cash market through May.
Cattle
Price action: June live cattle rose $2.275 to $199.075 and nearer the session high. May feeder cattle gained $2.25 to $280.95 and near the session high.
Fundamental analysis: The cattle futures markets today saw some short covering and perceived value buying. Some improved risk appetite in the general marketplace today was also supportive for the cattle markets.
Cash cattle and beef market fundamentals have deteriorated a bit recently. Last week’s cash cattle trade averaged $207.70. That’s down $3.44 from the week prior. We look for cash cattle trade this week to come in weaker again. Negative cutting margins at present may prompt packers to hold off on bidding up cash prices later this week. Today’s noon report showed wholesale boxed beef values rose, with Choice-grade up $1.39 to $335.61, while Select grade gained $1.22 to $315.18. Movement at midday was 51 loads. The Choice-Select spread is presently $20.43.
USDA’s monthly cattle-on-feed report is scheduled for this Thursday afternoon, as markets closed on Good Friday.
Technical analysis: Live and feeder cattle futures bulls and bears are on a level overall near-term technical playing field amid recent choppy trading. The next upside price objective for the live cattle bulls is to close June futures above resistance at $203.70, which is the top of a downside price gap on the daily bar chart. The next downside technical objective for the bears is closing prices below solid technical support at the April low of $191.80. First resistance is seen at last week’s high of $199.40 and then at $200.00. First support is seen at today’s low of $197.075 and then at $196.00.
The next upside price objective for the feeder bulls is to close May futures prices above technical resistance at $285.00. The next downside price objective for the bears is to close prices below solid technical support at the April low of $267.20. First resistance is seen at $282.275 and then at $284.00. First support is seen at today’s low of $279.375 and then at $278.00.
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 have all corn-for-feed needs covered in the cash market through April. You have all soymeal needs covered in the cash market through May.