Hogs
Price action: December lean hog futures surged $1.35 to $81.775 and closed near session highs.
Fundamental analysis: Lean hog futures saw a volatile session of trade on low volume, closing higher but well off intraday highs. December lean hogs were supported by steep discounts to the cash index, which widened over the past week as futures saw staunch selling pressure. The CME ended its 15-day streak of gains, dropping 18 cents to $90.43 as of Nov. 7. The preliminary calculation puts the index down another 41 cents to $90.02 tomorrow. December futures go off the board on Dec. 13. Given the $8.245 discount December futures hold to the index, the index would need to average a 33-cent drop per day over the coming month to be on par with December futures at expiration. Futures were likely supported by relative strength in the wholesale pork market today. After seeing large gains on Friday due to rocketing belly prices, pork cutout sunk just 11 cents to $102.27, led lower by a $13.73 drop in bellies.
Technical analysis: December lean hog futures posted strong gains following Friday’s breakdown. Bears continue to hold the near-term technical advantage. Resistance stands at $82.125 then $83.225. Bulls are seeking to hold support at $81.50 then the 20-day moving average, currently at $80.35, which capped the downside last week.
What to do: Get current with feed coverage. Carry all production risk in the cash market for now.
Hedgers: You have 50% of fourth-quarter production hedged in December $84.00 put options at $2.075 and 50% of first-quarter production hedged in February $84.00 puts at $3.35.
Feed needs: You have all of fourth quarter and 25% of first quarter 2025 soymeal needs in the cash market. You should also have all corn-for-feed needs covered in the cash market through November.
Cattle
Price action: December live cattle closed unchanged at $183.70, near mid-range and hit a six-week low early on. January feeder cattle rose 82 1/2 cents to $242.25 and near the session high.
Fundamental analysis: The live cattle futures market paused to start the trading week, with buyer interest limited by deteriorating technicals and a pullback in cash cattle and boxed beef prices. Last week’s cash cattle trading average dropped for the second consecutive week, down $3.29 at $186.53. The drop in the average cash price was more than expected and suggests packers will work to protect their margins. Such suggests cash cattle prices will trade lower again this week.
The noon report today showed wholesale beef values up a bit, with Choice-grade gaining 23 cents to $308.16, while Select rose 55 cents to $279.74. Movement at midday was decent at 80 loads. The Choice-Select spread is presently $28.42.
Cattle futures bears are also taking note that packers are holding larger cattle inventories following recent strong purchases. This may continue to weigh on cash cattle and boxed beef cutout values in the near term. Also, it’s not a seasonally bullish time of year for the cattle markets, with the holidays approaching and consumer focus more on purchasing turkeys and hams.
Technical analysis: The live and feeder cattle futures bulls have lost their overall near-term technical advantage to suggest market tops are in place. A bear flag pattern has formed on the daily bar chart for December live cattle futures and prices are starting to trend down. The next upside price objective for the live cattle bulls is to close December futures above solid resistance at last week’s high of $186.60. The next downside technical objective for the bears is closing prices below solid technical support at $180.00. First resistance is seen at today’s high of $184.25 and then at $185.275. First support is seen at today’s low of $182.80 and then at $182.00. The next upside price objective for the feeder bulls is to close January futures prices above technical resistance at the October high of $248.525. The next downside price objective for the bears is to close prices below solid technical support at $235.00. First resistance is seen at $243.30 and then at last week’s high of $245.55. First support is seen at the November low of $239.50 and then at $238.00.
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 of fourth quarter and 25% of first quarter 2025 soymeal needs in the cash market. You should also have all corn-for-feed needs covered in the cash market through November.