Hogs
Price action: December lean hogs fell 47 1/2 cents to $79.55, nearer the daily low and hit a three-week low.
Fundamental analysis: Lean hog futures succumbed to technical selling pressure today amid a deteriorating near-term chart posture. Weaker cash hog market fundamentals are also prompting seller interest in futures. Hog market bulls are hoping the discount futures presently hold to the cash hog index will limit selling pressure in futures.
The latest CME lean hog index is down another 78 cents to $88.49 as of Nov. 15, the sixth decline in the last seven days. Wednesday’s projected CME cash index is down another 40 cents to $88.09. The national direct five-day rolling average cash hog price quote today is $85.84.
The noon report today showed pork cutout value dropped $2.34 to $94.73, led by declines in bellies and picnics. Movement at midday was decent at 205.2 loads.
On the positive side for the cash and futures markets, demand for pork remains strong. Consumer demand for hams ahead of the Thanksgiving holiday should work to at least stabilize cutout values.
Technical analysis: The lean hog futures bulls still have the overall near-term technical advantage. However, a three-month-old price uptrend on the daily bar chart has been negated. This bull-market is very mature and recent losses suggest a market top is in place. The next upside price objective for the hog bulls is to close December prices above solid chart resistance at $82.50. The next downside price objective for the bears is closing prices below solid technical support at $77.50. First resistance is seen at $80.00 and then at this week’s high of $80.55. First support is seen at today’s low of $78.90 and then at $78.00.
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 surged $2.475 higher to $186.575 and closed on session highs. January feeder cattle futures climbed $2.50 to $252.00, closing on session highs.
Fundamental analysis: Live cattle futures continue to surge higher, with December futures settling well above last week’s cash average, negating the recent discount structure. Feeder futures continue to lead fats higher, though it is difficult to ignore the impressive strength seen in live cattle futures, which closed at the highest mark in nearly two weeks. Cash cattle trade has yet to initiate this week, offering little fundamental support to futures, though traders are anticipating a rebound in cash cattle prices in the coming weeks. Choice beef found solid support after bottoming last week near $303.00. Choice cutout was up another $1.23 to $308.51 at midsession today, while Select dipped 93 cents to $274.52, further widening the Choice/Select spread to $33.99.
After trending sideways for over a month, the feeder cattle index surged to a more than three-month high, climbing $1.27 to $252.31 as of Nov. 14. That strength has fueled the surge in feeder cattle futures as the January contract climbed to a three-and-a-half-month high today, putting together three strong days of gains in a row. The strength seen in both feeders and fats are likely to encourage feedlots to hold out for higher cash cattle bids, but packer margins remain solidly in the red, limiting their willingness to pay up for near-term supplies.
Technical analysis: December live cattle future surged higher today, negating the recent downtrend. Prices rallied and closed above the 10-day, 20-day and 40-day moving averages. Initial resistance stands at $186.625, which is backed by $187.50. A resurgence of selling pressure finds support at $185.80, with significant backing from $185.00.
January feeder cattle futures surged to a nearly four-month high today as bulls continue to maintain the technical advantage. Continued strength finds resistance at $253.00 then $255.00. Support lies at the psychological $250.00 mark then $248.525 on corrective 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 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.