Hogs
Price action: December lean hog futures climbed 67.5 cents to $76.825 and settled nearer session highs.
Fundamental analysis: Lean hog futures scored a fresh for-the-move high as technical buying pushed futures higher today. Technical strength and rebounding pork cutout trumped continued weakness in the cash hog market as December futures traded to the highest mark in over four months. Traders seem to anticipate a mild downturn in the cash market into early winter, likely supported by improved pork demand at the meat counter. The CME lean hog index is down 7 cents to $84.83 as of Oct. 3, ending a three-day uptick. The decline is expected to accelerate tomorrow, as the preliminary calculation puts the index down another 57 cents to $84.26 tomorrow, though that would still be above last week’s for-the-move low. Wholesale pork prices on the other hand were quite strong this morning. Cutout was up $2.17 to $96.48 at midsession, driven higher by picnics, butts and loins. Movement rebounded to 205.84 loads after slowing down last week as grocers likely cleared out packer reserves for October features.
Technical Analysis: December lean hog futures marked a fresh for-the-move high, though struggled to garner much bullish momentum above last week’s range. Bulls continue to hold the near-term technical advantage. Initial resistance stems from $77.35, which is quickly backed by $77.725 then the psychological $80.00 mark. Support comes in at Friday’s low of $75.775, the 10-day moving average at $75.35, then the psychological $75.00 mark. A break below that would find support at $74.40.
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 October. You are hand-to-mouth on corn-for-feed.
Cattle
Price action: December live cattle rose 2 1/2 cents to $187.025 and near mid-range. October live cattle rose 47 1/2 cents to $187.475 and moved to a premium to the December. November feeder cattle fell 12 1/2 cents to $249.15, near mid-range and hit a nine-week high early on.
Fundamental analysis: The live and feeder cattle futures markets paused today amid solid near-term price uptrends and improving cash market fundamentals. Cash cattle prices last week firmed for a fourth consecutive week, with the average price of $186.89, which is up 74 cents from the week prior. However, with packer margins deep in the red, it’s unlikely packers will want to raise cash cattle bids this week. However, feedlot operators won’t be in a hurry to move cattle at lower prices, so look for extended cash negotiations late into the week. The noon report today showed wholesale boxed beef values rose again, with Choice-grade up $2.79 to $305.37, while Select gained $2.72 to $290.33, taking the Choice/Select spread to $15.04. Movement at midday was 58 loads.
Retailers are likely to continue buying beef more aggressively through mid-October, for planned early-November beef features, especially as Thanksgiving arrives later, on November 28. However, grocer demand for beef could drop off in late October or early November as the retailers shift their focus to turkeys and hams for Thanksgiving features.
Technical Analysis: The live and feeder cattle futures bulls have the firm overall near-term technical advantage amid steep four-week-old price uptrends in place 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 $182.00. First resistance is seen at last week’s high of $187.90 and then at $189.00. First support is seen at $186.00 and then at $185.00. The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at $255.00. The next downside price objective for the bears is to close prices below solid technical support at $240.00. First resistance is seen at $250.00 and then at $251.00. First support is seen at $246.825 and then at $245.00.
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 soymeal needs covered in the cash market through October. You are hand-to-mouth on corn-for-feed.