Hogs
Price action: Hog futures rebounded from early losses, with the nearby April contract ending the day having rallied $1.025 to $87.725. Most-active June settled 50 cents lower at $95.275.
Fundamental analysis: Hog futures continued struggling despite last week’s bullishly construed USDA Hogs & Pigs report, since almost all the numbers published in the report fell short of expectations. Bears may be keying upon the fact that last week’s hog slaughter topped the year-ago figure by 3.6%, which at first glance suggests hog supplies are proving surprisingly large. However, March 31, 2024 was Easter Sunday, which means hog slaughter for both the week before and the week after was depressed by packing industry holiday-related closures. That situation will almost surely be reversed during the two weeks surrounding Easter this year on April 20.
Bears are also anticipating continued short-term cash weakness, as indicated by the expiring April contract’s close at $87.725 (it expires two weeks from today on April 14). That’s below the latest official quote (for last Wednesday, March 26) for the CME Lean Hog Index at $89.13, which was unchanged from the day prior. Thursday’s preliminary figure is likely to come in 35 cents lower at $88.78, while Friday’s USDA data points to a quote at $88.50, down another 28 cents. Meanwhile, after trading mostly between $95.00 and $100.00 last week, pork cutout bounced $1.44 to $98.00 at midsession today. The rise was impressive, and might be sustained through the end of the day, since it was mostly powered by a strong rise in ham prices. We expect more of the same over the next 10 days as grocers complete ham purchases for planned Easter features. We still tend to think the traditional spring advance will make summer futures look underpriced in the coming weeks.
Technical analysis: Bears still own the short-term technical advantage in June lean hog futures, with the contract finding support at a four-week low of $93.70 today. That will serve as backing for stout psychological support at the $95.00 level. A close below today’s low would have bears targeting the March 4 low of $92.00, then the psychologically important $90.00 level. The bearish case was weakened substantially by the strong rebound from the early low and mid-to-upper range close. Look for initial resistance at the daily high of $96.525, which roughly coincides with a zone of resistance between the contract’s 10- and 20-day moving averages at $96.34 and $96.69, respectively. Look for additional resistance at last Friday’s high of $98.225, then at the 40-day moving average near $99.18.
What to do: Get current with feed coverage.
Hedgers: You are carrying all production risk in the cash market.
Feed needs: You have all corn-for-feed needs covered in the cash market through April. You have all soymeal needs covered in the cash market through May.
Cattle
Price action: June live cattle fell $1.20 to $203.65 and near mid-range. May feeder cattle fell 67 1/2 cents to $284.50, nearer the daily high.
Fundamental analysis: The cattle futures markets saw some profit-taking pressure today amid a general “risk-off” trader and investor mentality in the general marketplace. President Trump says new trade tariffs will kick in on Wednesday, which has the marketplace nervous. However, a strong rebound in the U.S. stock indexes after hitting multi-month lows early on today likely also helped the cattle futures markets to move up from their daily lows.
Cash cattle and beef market fundamentals remain solid. Cash cattle trading prices last week averaged $212.14, just off from the previous week’s record average trade of $212.76. Wholesale beef values rose at midday today, with Choice-grade up $1.01 to $333.83, while Select gained 49 cents to $319.17. Movement at midday was 53 loads. The Choice-Select spread is presently at $14.66.
Technical analysis: Live and feeder cattle futures bulls still have the solid overall near-term technical advantage. Prices are trending higher on the daily bar charts. The next upside price objective for the live cattle bulls is to close June futures above solid resistance at the contract high of $207.30. The next downside technical objective for the bears is closing prices below solid technical support at last week’s low of $199.60. First resistance is seen at today’s high of $204.65 and then at $206.35. First support is seen at today’s low of $202.55 and then at $201.00.
The next upside price objective for the feeder bulls is to close May futures prices above technical resistance at the contract high of $290.625. The next downside price objective for the bears is to close prices below solid technical support at $277.225. First resistance is seen at today’s high of $285.65 and then at $287.175. First support is seen at last week’s low of $280.80 and then at $280.00.
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 corn-for-feed needs covered in the cash market through April. You have all soymeal needs covered in the cash market through May.