Hogs
Price action: December lean hogs rose 85 cents to $79.125, nearer the session high and hit at six-month high.
Fundamental analysis: Technical buying from the speculators was featured in lean hog futures today, as the near-term technical posture is fully bullish. December lean hog futures continue to narrow their discount to the CME cash index, with the spread presently at just over $5.00.
Cash hog and pork market fundamentals also lean friendly for prices as the National Pork Month of October is winding down. The latest CME lean hog index is up 27 cents to $84.23 as of Oct. 18. Wednesday’s projected cash index price is up 11 cents to $84.34. The five-day national direct cash hog price quote today is $75.95. Recent cash hog market strength is likely to continue to support buying interest in futures. Continued strength in the cash hog market could be a signal that traders are realizing USDA has overestimated hog numbers. The noon report today showed pork cutout value down $1.16 to $97.08, led by losses in loins and picnics. Movement at midday was decent at 167.01 loads.
Technical analysis: The lean hog futures bulls have the solid overall near-term technical advantage. A nine-week-old price uptrend is in place on the daily bar chart. The next upside price objective for the hog bulls is to close December prices above solid chart resistance at the contract high of $80.65. The next downside price objective for the bears is closing prices below solid technical support at $75.00. First resistance is seen at today’s high of $79.45 and then at $80.65. First support is seen at $78.00 and then at $77.00.
What to do: Get current with feed coverage. Carry all production risk in the cash market for now.
Hedgers: Carry all risk in the cash market for now.
Feed needs: You have all soymeal needs covered in the cash market through November. You have all corn-for-feed needs covered in the cash market through October.
Cattle
Price action: December live cattle futures climbed $1.30 to $188.125 and settled near session highs. November feeder cattle futures rallied $2.325 to $248.925.
Fundamental analysis: Cattle futures reversed yesterday’s losses and closed solidly higher on the day as cash fundamentals continue to support futures. Dressed weights continue to march higher as feedlots hold onto cattle longer to get more meat out of each steer. That trend is likely to persist into the winter, though the increased weights have not had much of an effect on either the cash cattle or beef markets. Some early trade took place in Iowa this week at $187.00, which is down modestly from a week ago where trade averaged $187.45. Active trade is unlikely to develop until the latter half of the week. Strong futures trade today and continued strength in the beef market is likely to continue to underpin cash cattle. Choice beef continues to march higher, rising $1.24 to $324.10 at midsession. Select did dip $2.60 to $293.61 this morning, which widened the Choice/Select spread to $30.49. Movement this morning was strong at 81 loads.
Feeder cattle futures surged higher today as well. Feeders continue to be supported by the feeder cattle index, which most recently fell 54 cents to $250.26 after climbing to a for-the-move high on Oct. 17. The index continues to lead futures higher as traders are pessimistic about the longer-term outlook for feeders, but until the index reverses lower, strength is likely to persist in feeder futures.
Technical analysis: December live cattle futures reversed Monday’s losses and continued to climb higher. Bulls continue to hold the near-term technical advantage as they are seeking to overcome the Oct. 11 for-the-move high at $188.55. Strength above that mark would have bulls eyeing the psychological $190.00 mark. The 10-day moving average continues to serve up strong support at $187.05 with additional support at $187.675 on the way.
November feeder cattle futures marched higher today as bulls continue to hold the near-term technical advantage. Today’s strength flipped the 10-day moving average to initial support at $247.50, with weakness below that mark finding support at $246.35. Continued strength finds resistance at the psychological $250.00 mark, which is backed by the Oct. 14 for-the-move high at $251.25.
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 soymeal needs covered in the cash market through November. You have all corn-for-feed needs covered in the cash market through October.