Hogs
Price action: October lean hogs fell 25 cents to $78.55, nearer the session low and hit a three-week low.
Fundamental analysis: The October lean hog futures saw some more profit-taking pressure from the speculators today, after prices last week hit a three-month high. Five down-days in a row in October hogs does hint the market is due for a corrective bounce soon.
Cash hog and pork market fundamentals are weakening, which is keeping the hog futures bulls timid. The latest CME lean hog index is down 50 cents to $85.74 as of Sept. 6, the lowest since early April. Wednesday’s cash index is projected to be down another 18 cents to $85.56. The national direct 5-day rolling average cash hog price quote today is $78.05. The widening discount the futures contracts hold to the cash index shows the stronger bearish attitudes among hog futures traders. The noon report today showed pork cutout value dropped 17 cents to $95.55. Movement at midday was decent at 218.21 loads. On the positive side, retailers are likely stocking up supplies for National Pork Month in October.
Technical analysis: The lean hog futures bulls still have the slight overall near-term technical advantage. However, a four-week-old uptrend on the daily bar chart is now in jeopardy. The next upside price objective for the hog bulls is to close October prices above solid chart resistance at the September high of $83.375. 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 $79.55 and then at this week’s high of $80.025. First support is seen at $78.00 and then at $77.00.
What to do: Get current with feed advice. Carry all production risk in the cash market for now.
Hedgers: Carry all risk in the cash market for now.
Feed needs: You should have all corn-for-feed and soymeal needs covered in the cash market through August.
Cattle
Price action: October live cattle futures dipped 65 cents to $176.275 and settled nearer session lows. October feeder cattle futures climbed 72.5 cents to $235.45.
Fundamental analysis: Cattle futures traded in a relatively tight range today without much volatility as traders await direction from the cash market. Weaker cash trade sent futures sharply lower last week and anticipation that the downside was overdone helped spur corrective gains yesterday, but bulls are not overly optimistic that cash prices will rebound soon. Cash trade has yet to take place this week and will likely be pushed late into the week as packers seemingly have sufficient supplies. Wholesale beef prices were mixed this morning as Choice cutout climbed $1.06 to $309.58 and Select sunk a penny to $298.48. Movement was strong at midsession at 89 loads which likely helped pull futures off their lows this morning.
Feeder futures saw relative strength today, posting gains despite the weakness seen in fats. Continued strength in the feeder cattle index, which is up $1.74 to $243.92, is helping pull feeder futures higher. Traders continue to anticipate a downturn in the index into the fall and winter months before prices rebound next spring.
Technical analysis: October live cattle futures traded within Monday’s range, ultimately closing lower on the day. Bears retain the near-term technical advantage but have put in a higher low versus the mid-August low, which is the first sign a change in trend could be taking place. Bulls are looking to overcome resistance at $177.575 before tackling resistance at $178.20, the 20-day moving average. A close above that mark opens the door for a test of stiff resistance at $180.00. Support stems from today’s low of $175.95 then $173.775.
October feeder cattle futures saw relative strength today, closing modestly higher but still within last week’s range. Bears continue to hold the near-term technical advantage. Bulls are seeking to close prices above the 10-day moving average at $235.65 before tackling resistance at $237.55. Support comes in at $234.075, then last week’s low of $230.425.
What to do: Get current with feed advice. 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 have all corn-for-feed and soymeal needs covered in the cash market through August.