Hogs
Price action: December lean hog futures sunk 85 cents to $83.225 and settled on session lows.
Fundamental analysis: Lean hogs succumbed to corrective selling pressure today as December futures continue to butt up against technical resistance. December futures have traded above $84.50 for four consecutive sessions but have been unable to close prices above that level, with bears following through to the downside today. Traders are likely anticipating a return of seasonal weakness in the cash market as well, though strength in cash fundamentals persists, which could limit the downside seen in futures in the next couple of days. The CME lean hog index is up another 63 cents to $88.56 as of Oct. 31, the 11th consecutive daily gain. The preliminary calculation puts the index up another 82 cents to $89.38 tomorrow. Wholesale pork prices continue to rise as well. Pork cutout rose another 81 cents to $104.78 at midsession today, led by strength in loins. Bellies, which have recently led strength, fell $8.41 this morning. Traders are likely to keep a close eye on belly prices in the next couple of days.
Technical analysis: December lean hog futures underwent persistent selling pressure today, though bulls retain the technical advantage. Bulls have struggled to overcome resistance at $84.50, which has capped gains the past four sessions. Additional strength seeks to overcome Friday’s high of $85.075. Support lies at $82.50 then the 10-day moving average at $81.85.
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 85 cents to $185.075, nearer the session low and closed at a four-week-low close. November feeder cattle lost 52 1/2 cents to $246.35 and near mid-range.
Fundamental analysis: The cattle futures markets saw more technical selling and profit-taking pressure to start the trading week. The near-term chart postures for live and feeder cattle futures markets have deteriorated and traders are concerned the heretofore strong cash market fundamentals will also start to weaken. Last Friday’s downbeat U.S. jobs report also added some worry for the cattle market bulls.
Cash cattle prices last week fell for the first time in eight weeks, although the drop was slight and less than expected. Last week’s average cash cattle trading price was down 23 cents at $189.82. Look for this week’s active cash cattle trading to occur late in the week. The noon report today showed wholesale boxed beef prices up to start the trading week, with Choice gaining $1.69 to $318.03, while Select rose $1.57 to $286.60. Movement at midday was 45 loads. The Choice-Select spread is presently $31.43. Beef packer margins have slipped recently and are presently just barely in the black.
This week is arguably the biggest U.S. markets-event week of the year, as the elections are Tuesday and the Federal Reserve’s FOMC also meets this week. Any turbulence in the stock and financial markets this week could spill over into more selling pressure in the livestock futures markets.
Technical analysis: The live and feeder cattle futures bulls still have the overall near-term technical advantage but are fading. Seven-week-old price uptrends on the daily bar charts have been negated. The next upside price objective for the live cattle bulls is to close December futures above solid resistance at $188.00. 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 $186.05 and then at $187.00. First support is seen at last week’s low of $184.45 and then at $183.00. The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at the October high of $251.25. The next downside price objective for the bears is to close prices below solid technical support at $240.00. First resistance is seen at Friday’s high of $247.50 and then at $249.00. First support is seen at last week’s low of $243.65 and then at $242.00.
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.