Hogs
Price action: December lean hog futures fell 47.5 cents to $81.875, settling nearer session highs.
Fundamental analysis: Lean hog futures succumbed to resurgent selling pressure as technicals work against hog bulls, though resurgent strength in cash fundamentals pared losses and prices closed nearer session highs. Weakness in the CME lean hog index, which is down 14 cents to $89.88 as of Nov. 11, has had traders assuming the resumption of seasonal weakness in the index. Meanwhile, the preliminary calculation points to the index actually being up 6 cents to $89.94 tomorrow, ending the recent slide and giving bulls a fresh dose of momentum. The uncertainty surrounding the cash market is likely to bring about volatility in the coming days. While the index is pointed higher, the number of hogs trading hands in the negotiated market has shrunk the past couple of days, essentially marking today’s bounce on low volume, so traders will continue to keep a close eye on the cash index the next few days.
Wholesale pork prices helped boost futures from today’s lows as well. After facing sharp selling the past couple days, pork cutout bounced $1.36 to $99.04 at midsession, led by strength in loins though all cuts except picnics and ribs posted gains this morning. Demand at the meat counter for pork remains quite strong. Today’s CPI report noted that all cuts of pork are priced at below a year ago aside from hams, which are steady with last year. That likely is keeping consumers purchasing pork, limiting the downside in pork cutout.
Technical analysis: After sustained selling pressure early in today’s session, December lean hog futures rebounded from intraday lows and closed nearer intraday highs. Resurgent selling pressure finds support at today’s low of $80.775, which is backed by the psychological $80.00 mark then this week’s low of $79.80. Resistance comes in at $82.00 then the 10-day moving average at $82.25. Sustained strength finds resistance at yesterday’s high of $83.425.
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 futures slid 37.5 cents to $184.025 Wednesday. Expiring November feeder futures slipped 35 cents to $246.475, while most-active January edged up 7.5 cents $243.65.
Fundamental analysis: Short-term prospects for the live cattle market seem generally negative. A portion of the expected weakness reflects seasonal pressures, particularly the retail industry and customer shift in focus to turkeys and hams during the year-end holiday season. This year may prove particularly negative since the late arrival of Thanksgiving essentially puts it on the same weekend as the first weekend in December. That will limit first-of-the-month retail beef features in early December. Moreover, since Christmas and New Years Day are on Wednesday this year, it will likely limit holiday parties and family get-togethers. This all implies reduced beef demand.
Supplies, especially those of high-quality cattle and beef remain tight, as indicated by the wide spread between Choice- and Select-grade beef at $28.12 at noon today. Choice-beef cutout did slip to 78 cents to $307. 49, but that figure remains historically high. Bulls were likely encouraged by news of 596 fed heifers selling for $185.67 in Iowa Tuesday, down only about 30 cents from last Friday. Beef prices seem likely to remain elevated, especially when viewed in the context of the latest CPI numbers. That is, while the data showed the average price of all beef had posted an annual increase of 1.9% during October, the result reflected a 0.5% drop from September. Moreover, steak prices posted monthly and annual declines of 2.9% and 2.5%, respectively. Those reductions seem likely to maintain robust consumer demand for beef. We still doubt current weakness will prove all that severe or last all that long.
Feeder traders continue anticipating short-term weakness in the cash markets for live and feeder cattle. The November feeder contract, which expires at noon next Thursday (11/21), ended the day about $3.00 under the latest quote for the feeder index (at $249.64), with January futures trading about $6.00 under the cash equivalent price. Thus, futures could soon begin looking undervalued if the cash market remains stable in the $250.00 area or rebounds.
Technical analysis: Bears hold the short-term technical advantage in December live cattle futures. Today’s high of $184.625 essentially matched initial resistance at the contract’s 200-day moving average near $184.53. A breakout above that area would have bulls targeting the pivotal 40-day moving average near $186.09, then last week’s high of $186.60. Topping that point would open the door to a retest of the psychological $190.00 level. Today’s low marked initial support $183.875, with backing from yesterday’s low of $183.325, then Monday’s low at $182.80. A close below that point would have bears focused on the psychological $180.00 level.
Bears also own the short-term technical advantage in January feeder futures, although a short-term rebound could quickly shift the situation back in the bulls’ favor. The contract effectively closed on initial support at its 10-day moving average of $246.49, with close backing from the daily low of $246.225. Look for added support at Monday’s low of $244.47, then the Nov. 1 low of $243.65. A drop below that point would have bears again targeting the psychological $240.00 level. Today’s high placed initial resistance at $247.125. Look for strong backing from the confluence of the contract’s 20- and 40-day moving averages near $247.78 and $247.65, respectively. Expect stiffer resistance in the chart gap between last Wednesday’s high of $248.95 and the Oct. 30 low of $249.40, then at the $250.00 level.
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.