Hogs
Price action: Resurgent wholesale prices spurred nearby hog gains Thursday, with nearby February futures rising 65 cents to $82.125, whereas most-active April slipped 7.5 cents to $87.20
Fundamental analysis: Little seemed to change in the hog market Thursday, with cash values continuing their recent climb. Tuesday’s official quote at $81.72 is up 26 cents from Monday, the second largest daily gain since the index bottomed earlier this month. The latest USDA data indicates Wednesday’s quote will rise another 21 cents to $81.93. Today’s February futures close around $82.00 indicates traders think the cash market is set to stall (or reverse from an intermediate high). We are somewhat more optimistic, anticipating continued seasonal strength through much of February. Seasonally diminishing slaughter rates should meet firm demand arising from both the wholesale and retail sectors. Indeed, pork cutout surged $2.93 at midsession today, reaching $93.10. Just as impressive as the size of the increase was the fact that the various cuts posted across-the-board gains. That almost surely supported late futures strength.
We’ll have to wait until tomorrow afternoon, after the futures close, to see the weekly slaughter total. If it tops the year-ago level, that would go far toward confirming the December USDA Hogs & Pigs report and its implication that hog supplies will begin running consistently above year-ago levels. However, if it dips below its 2024 counterpart, there’s a significant chance the USDA overestimated hog supplies in the report.
Technical analysis: Bears still seem to own the short-term technical advantage in April hog futures in the wake of the Friday-Tuesday breakdown. Bulls proved unable to overcome initial resistance around the 20-day moving average near $87.87 today. That’s backed by the 10- and 40-day moving averages near $88.68 and $89.02, respectively. Expect psychological resistance at $90.00 as well. Today’s low marked initial support at $86.15, with close backing from yesterday’s low at $86.00. A drop below that point would have bears targeting psychological support at $85.00, then the Jan. 8 low of $84.50. A close below that level would open the door to a test of the $80.00 level.
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 rose 95 cents to $200.725, near the session high and hit a new contract high. February live cattle closed up $1.05 to $201.10 and scored a record-high for nearby futures of $201.45. March feeder cattle rose $1.00 to $274.075, near the session high and hit a contract high. Expiring (January) feeder cattle futures today hit a record high of $277.85.
Fundamental analysis: Technical buying from the chart-based speculators was featured today, with cash cattle and beef market fundamentals remaining solid. Live cattle futures are being supported by their discounts to the cash cattle market.
Cash trade earlier this week saw the Southern Plains with steady prices from last week. USDA reported Tuesday’s cash trading was minimal, with Texas-Oklahoma trading at $201.00, while Kansas was more active at an average around $201.25. Wednesday’s trade remained very light, with southern cattle trading for $201.00-$202.00, whereas a few Iowa-southern Minnesota steers averaged $205.84. The latter seems to bode well for this week’s cash average. The noon wholesale report today showed boxed beef prices weaker, with Choice grade falling 50 cents to $331.52, while Select grade dipped 6 cents to $317.93. Movement at midday was decent at 91 loads.
Bullish for feeder cattle is news that as of Jan. 23, the import of live cattle from Mexico to the U.S. remained suspended due to the detection of New World screwworm (NWS) in southern Mexico. The ban, implemented on Nov. 22, 2024, is still in effect with no definite date set for its lifting.
Weekly USDA beef export sales data is out Friday morning, while the agency will release its monthly Cattle-on-Feed report Friday afternoon. Industry analysts expect little year-to-year change in placements, marketings or the feedlot population.
Technical analysis: Cattle futures bulls have the strong near-term technical advantage. There are no strong, early clues that market tops are close at hand. Prices are in 2.5-month-old uptrends on the daily bar charts. The next upside price objective for the live cattle bulls is to close April futures above solid resistance at $205.00. The next downside technical objective for the bears is closing prices below solid technical support at $195.00. First resistance is seen at today’s contract high of $200.90 and then at $202.00. First support is seen at today’s low of $199.175 and then at $198.00.
The next upside price objective for the feeder bulls is to close March futures prices above technical resistance at $280.00. The next downside price objective for the bears is to close prices below solid technical support at $265.00. First resistance is seen at today’s contract high of $274.65 and then at $275.00. First support is seen at today’s low of $271.825 and then at $270.00.
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.