Hogs
Price action: Diving pork prices likely undercut hog futures Thursday, with nearby December tumbling $1.775 to $80.10 at the close.
Fundamental analysis: The cash hog market continues holding up well. The CME confirmed Tuesday’s hog index quote at $89.94, up six cents from Monday. The latest USDA data implies it will give back that rise and then some, falling back to $89.78 when Wednesday’s index is published tomorrow. We still think the surprising lack of active market hog expansion this fall, especially in the wake of a big surge implied by the USDA’s September Hogs & Pigs report, has played a major role in recent hog and pork strength. However, slaughter is still likely to continue working its way up to an annual high in mid-December, which typically weighs on the whole complex.
Seasonal ham price strength usually proves supportive at this time of the year, but consumer demand for the other pork cuts often undercuts the complex. That was certainly the case today, with primal pork belly values plunging over $25 and dragging pork cutout down $4.23 to $93.03 at midsession. News of that drop probably played a significant role in the futures drop. The belly dive will likely be at least partially reversed in afternoon trading, but hopes for a full rebound are probably forlorn. We suspect downside risk could prove limited if hog slaughter continues struggling to match year-ago levels, due in part to CPI data indicating most October retail pork prices posted year-to-year reductions, implying consumer demand remains relatively robust.
Technical analysis: Bulls still hold the short-term technical advantage in December lean hog futures, but today’s breakdown greatly weakened their hold. Psychological support at $80.00 limited the drop, marking initial support, with backing from the daily low of $79.40. A continuation breakdown below that point would have bears targeting the 40-day moving average at $78.44. The 20- and 10-day moving averages mark resistance at $81.18 and $81.83, respectively. The daily high represents added resistance at $82.35. Stiffer resistance stands at Monday’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 fell $1.075 to $182.95, nearer the session low and hit a seven-week low. January feeder cattle fell 45 cents to $243.20 and nearer the session low.
Fundamental analysis: Technical selling was featured in the cattle futures markets today amid recently deteriorating near-term technical postures. Cash cattle and beef market fundamentals have also weakened. Active cash cattle trade in the northern market occurred Wednesday. Nebraska saw 3,331 head trade at $185.23, with Iowa-southern Minnesota seeing 1,331 head trade at $184.26. The weighted average for the two areas was $185.09, down about $1.30 from last week’s average. Despite poor margins, packers’ inquiry into cash cattle increased Wednesday.
Today’s noon report showed wholesale boxed beef values lower again, with Choice falling $2.66 to $304.28, while Select dropped $2.04 to $276.62. The Choice-Select spread is presently $27.66. Movement at midday was good at 105 loads. Lower wholesale beef values this week continue to push packer margins deeper into the red.
Recent record-high cattle weights have increased beef supplies. Combined with a rise in cattle slaughter levels lately, such has pushed weekly beef production above year-ago levels.
Technical analysis: The live cattle futures bulls have lost their overall near-term technical advantage to suggest a market top is in place. Prices are trending down on the daily bar chart. The next upside price objective for the live cattle bulls is to close December futures above solid resistance at $186.00. 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 $183.975 and then at $185.275. First support is seen at today’s low of $182.675 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 the October low of $239.50. First resistance is seen at today’s high of $$244.80 and then at last week’s high of $245.55. First support is seen at $242.00 and then at $241.00.
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.