Hogs
Price action: December lean hog futures climbed 65 cents to $74.875 and settled nearer session highs.
Fundamental analysis: Lean hog futures ended the day higher, led by the deferred contracts. While gains in the October contract have stalled, December futures continue to march higher on the daily bar chart, supported by anticipation of continued robust consumer demand. Bulls are fighting seasonally rising pork production and seasonally weaker wholesale and hog prices. The CME lean hog index is down 2 cents to $84.36 as of Sept. 19, following a one-day 16 cent uptick. The preliminary calculation puts the index down another 7 cents to $84.29 tomorrow. October futures continue to trade at a modest discount to the index, while winter and early spring contracts have been tightening the discounts seen to the cash market. Pork cutout was down 56 cents to $93.59 this morning, driven lower by ham. Movement rebounded to 199.91 loads this morning following a disappointing 232.91 loads on Friday. It will be difficult to see a sustained rebound in the cash hog market without corresponding strength in pork cutout.
Technical analysis: December lean hog futures continue to show relative strength as bulls continue to hold the near-term technical advantage. Bulls are seeking to cross prices above psychological $75.00 resistance before tackling resistance at $76.05. Above there, resistance stands at $77.50, which proved formidable when last tested in early summer. Profit-taking finds support at $74.075, which is backed by the 10-day moving average at $73.30.
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: December live cattle rose 62 1/2 cents to $183.825 and near mid-range. November feeder cattle rose 97 1/2 cents to $242.75 and nearer the session high. Both markets hit seven-week highs today.
Fundamental analysis: The cattle futures markets today saw follow-through technical buying in the wake of last week’s good gains and after last Friday afternoon’s USDA cattle-on-feed report that held no bearish surprises. The agency estimated there were 11.198 million head of cattle in large U.S. feedlots (1,000-plus head) as of Sept. 1, up 71,000 head (0.6%) from last year. August placements declined 1.4%, while marketings fell 3.6% from year-ago levels.
Feeder cattle futures showed impressive strength today despite solid gains in corn futures prices.
Last week’s cash cattle trading averaged $184.01, up $1.90 from the week prior. Packers last week bought the most cattle since June. Packer margins are back in the red now, so packers may be more skittish this week. Still, the rise in the average cash cattle price last week gives bulls optimism for higher cash prices again this week.
Today’s noon report showed wholesale boxed beef values rose again, with Choice-grade up $1.44 to $301.63, while Select-grade rose 33 cents to $288.92. Movement at midday was light at 37 loads. The Choice-Select spread is currently $12.71.
Technical analysis: The live and feeder cattle futures bulls have the overall near-term technical advantage amid steep 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 $187.50. The next downside technical objective for the bears is closing prices below solid technical support at $177.50. First resistance is seen at today’s high of $184.475 and then at $185.00. First support is seen at today’s low of $182.825 and then at $181.00. The next upside price objective for the feeder bulls is to close November futures prices above technical resistance at $250.00. The next downside price objective for the bears is to close prices below solid technical support at $235.00. First resistance is seen at $244.00 and then at $245.00. First support is seen at $240.00 and then at $239.00.
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.