Livestock Analysis -- Advice (VIP) -- April 23, 2014

April 23, 2014 10:02 AM


Price action: Lean hog futures closed $2.15 to the daily limit of $3.00 higher through the December contract, finishing at their highs of the days. Lighter gains were posted in far-deferred contracts.

Fundamental analysis: Speculative buying and technical-based buying lifted lean hog futures in late trading. The move higher came as prices tested support at the 14-day moving average, which it closed above Tuesday, triggering active buy stops.

The wholesale pork market provided positive news by coming in 94 cents higher this morning. Perhaps more positive was news pork movement rose to 283.87 loads this morning, hinting that wholesale pork prices have found value buying levels.

Cash hogs were mostly steady today. Federally estimated slaughter was estimated at 418,000 head today, up from 412,000 head a week ago and even with a year ago.

Technical analysis: June futures closed at their highest level since April 1, penetrating resistance at the $125.20 area. The contract closed at the upper end of the uptrending channel, which has bracketed prices since their spike low April 9. A move above the channel could trigger additional buy stops and a test of the $128.85 to $129.35 gap area left April 1. The lower uptrending channel line provides support around $122.18 tomorrow.

Hedgers: 50% of expected 2nd-qtr. hog marketings and 50% of expected 3rd-qtr. Hog marketing are covered in $126.00 June lean hog put options for $3.90.

Feed needs: Carry all corn-for-feed and meal risk in the cash market for now.



Live cattle

Advice: Exit the 50% 2nd-qtr. hedge coverage in April live cattle futures. Our exit was $143.42 1/2 for a profit of 77 1/2 cents.

Price action: Live cattle futures opened under light pressure but ended mildly higher in reaction to news that cash cattle trade was getting underway at higher prices. Futures closed 12 1/2 to 52 1/2 cents higher for the day.

Fundamental analysis: Very light cash trade was reported in the Northern Plains at $148.75. Traders are unsure what price this will translate to for the Southern Plains, but it points to higher cash trade. Strength in the wholesale beef market and indications retailers are preparing for May "Beef Month" features have apparently caused packers to pay up for some supplies. With April live cattle ending the day at around a $3 discount to last week's cash trade, it appears there is more upside potential for the market tomorrow.

Technical analysis: June live cattle remained within the boundaries of this week's trading range and need to return above yesterday's high of $136.20 to rebuild upside momentum. Support lies at Monday's low of $133.92 1/2.


Feeder cattle

Price action: Feeder cattle futures ended 17 1/2 to 32 1/2 cents higher on spillover from live cattle futures.

Fundamental analysis: Feeder futures favored a firmer tone today on support from live cattle futures, though buying was limited by strength in corn. Tight calf supplies remain a key source of support.

Technical analysis: May feeder cattle futures posted an inside day of trade on the daily chart and closed mid-range. Futures remain in the long-lasting uptrend. A drop below $177.00 would violate the uptrend.

Hedgers: NEW ADVICE: Exit the 50% 2nd-qtr. hedge coverage in April live cattle futures. Our exit was $143.42 1/2 for a profit of 77 1/2 cents.

Feed needs: Carry all corn-for-feed and meal risk in the cash market for now, but be prepared to extend coverage on a price break.


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