Hogs
Price action: April lean hogs fell $1.35 to $82.35, near mid-range and hit a nearly six-month low early on.
Fundamental analysis: The lean hog futures market today fell victim to U.S. pork export demand worries as the U.S. ramped up trade tariffs against three of the five major U.S. pork importers: China, Mexico and Canada. Risk-off trading attitudes in the general marketplace due to the concerns over a global trade war also limited speculator buying interest in hog futures. Discounts futures hold to the cash hog index did help to lift futures prices off their daily lows. Also, today’s mid-range close in April hog futures begins to suggest the sellers are exhausted.
The latest CME lean hog index is up 50 cents to $89.94 as of Feb. 28. Wednesday’s projected lean hog index price is up another 28 cents to $90.22. The national direct five-day rolling average cash hog price quote today is $90.23. The noon report today showed pork cutout value down 88 cents to $98.91 on losses in butts and bellies. Movement at midday was good at 162.78 loads, suggesting still decent demand for pork from grocers.
Technical analysis: Lean hog futures bears have the firm overall near-term technical advantage amid the recent steep price downdraft. The next upside price objective for the hog bulls is to close April prices above solid chart resistance at $86.00. The next downside price objective for the bears is closing prices below solid technical support at $78.00. First resistance is seen at today’s high of $82.975 and then at $84.00. First support is seen at today’s low of $80.725 and then at $80.00.
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 March. You have all soymeal needs covered in the cash market through April.
Cattle
Price action: April live cattle futures surged $2.40 to $194.65 and closed on session highs. April feeder cattle futures inched 45 cents higher to $272.50.
Fundamental analysis: Fats saw extensive selling on this morning’s open and forged a fresh for-the-move low before rebounding and closing solidly higher on the day. The futures market has seen relative weakness compared to the cash market and today’s strength can be largely attributed to steep discounts to the cash cattle market. Late session strength also gives an inkling that heavy fund liquidation could be slowing, but confirmation will be needed on that score. Traders will keep a close eye on the cash market the rest of the week, as any sign of a low in cash cattle could quickly lead to a resurgence in futures’ strength. Wholesale beef saw a quiet morning of trade, rendering little net effect on futures. Choice cutout fell a penny to $313.92 while Select rose another 74 cents to $303.15, narrowing the Choice/Select spread to $10.77.
Feeder cattle futures continue to trade at a heavy discount to the cash market. While feeders narrowed that spread a bit last week, heavy fund liquidation quickly widened it back up this week. Heavy discounts to the feeder cattle index, which is most recently down 48 cents to $280.58, is likely to continue to encourage corrective buying in the next few days. Traders are likely to keep their eyes on outside markets though as continued risk-off trade would likely bleed over into the livestock markets.
Technical analysis: April live cattle futures posted a bullish reversal on the daily bar chart today. Followthrough buying tomorrow above last week’s highs would give the bulls a slight technical advantage. Initial resistance stems from the psychological $195.00 mark, with strength above that targeting last week’s high of $196.40. Support comes in at $193.50, a break below there would have bears eyeing yesterday’s close of $192.25, then $189.50.
April feeder cattle futures posted modest gains today after seeing heavy selling pressure early in the session. Bulls maintain a modest technical advantage on the daily bar chart. Resistance comes in at $273.75 then the psychological $275.00 mark on continued strength, while support comes in at $271.75 then $270.00 on resurgent selling.
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 March. You have all soymeal needs covered in the cash market through April.