Hogs
Price action: Hog futures fell significantly Thursday, with nearby December leading the way lower with a $1.525 drop to $78.65.
Fundamental analysis: The cash hog market has continued its contra-seasonal advance, which likely provided underlying for futures. The CME confirmed the hog index for Tuesday rose 32 cents to $84.66. Moreover, Wednesday’s preliminary quote surged another 54 cents to $85.20, which represents its first rise above $85.00 since early September.
However, pork cutout has weakened, which probably explains a significant portion of today’s futures reversal. Wednesday’s late pork quote marked an 18-cent drop from the midsession quote, with this morning’s follow-through drop of 82 cents to $97.40 likely spurring sales. Bears are likely anticipating a belated seasonal downturn in the days and weeks ahead. Conversely, today’s December futures close still implies a relatively modest decline, by historical standards, over the next 7 weeks.
Technical analysis: Today’s early failure to hold above the psychological $80.00 level probably played a sizeable role in the subsequent futures drop as well. Nevertheless, bulls still hold the short-term technical advantage in nearby December lean hog futures. Expect initial resistance at Tuesday’s high of $79.45, with a band of strong resistance likely between the $80.00 level and today’s high at $80.30. Bulls would likely be looking to challenge the $85.00 level if the market were to rebound back above that range. Today’s low places initial support at $78.425, which coincides with the highs posted from last Thursday through Monday. That’s backed by the 10-day moving average near $77.80, then the 20-day moving average near $76.76.
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 should also have all corn-for-feed and soymeal needs covered in the cash market through November.
Cattle
Price action: December live cattle rose $1.375 to $189.25 and hit a nearly three-month high. November feeder cattle gained $1.30 to $248.525. Both markets closed near their daily highs.
Fundamental analysis: Technically related buying in the live and feeder cattle futures markets was featured today, amid firmly bullish charts. Cash cattle and beef market fundamentals also remain solid.
Traders await cash cattle trade to develop in earnest this week. Just a few head of mixed steers and heifers traded at $187.00 Wednesday. After six consecutive weeks of higher cash cattle prices, packers this week have been slow to put out bids, while feedlot operators are holding out for still-higher prices. Packer margins solidly in the black suggest cash cattle prices are likely to be steady to firmer this week. Active cash cattle trade may not fully develop until after Friday afternoon’s USDA cattle-on-feed report.
Today’s noon report showed Choice-grade boxed beef prices down $1.05 to $320.36, while Select-grade fell 68 cents to $295.09. Movement at midday was good at 87 loads. The Choice-Select spread is presently $25.27. USDA this morning reported U.S. beef export sales of 16,700 MT for 2024, up 19% from the previous week and up 11% from the four-week average.
Technical analysis: The live and feeder cattle futures bulls have the firm overall near-term technical advantage. Prices are in seven-week-old price uptrends on the daily bar charts. The next upside price objective for the live cattle bulls is to close December futures above solid resistance at the July high of $190.075. The next downside technical objective for the bears is closing prices below solid technical support at last week’s low of $185.20. First resistance is seen at today’s high of $189.275 and then at $190.075. First support is seen at today’s low of $187.60 and then at this week’s low of $186.525. 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 $244.00. First resistance is seen at this week’s high of $249.40 and then at $250.00. First support is seen at this week’s low of $246.10 and then at last week’s low of $244.925.
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 should also have all corn-for-feed and soymeal needs covered in the cash market through November.