Livestock Analysis (VIP) -- Advice -- April 3, 2013

April 3, 2013 09:48 AM
 

Hogs

Advice: Lift the 2nd-qtr. coverage in long July corn futures and long July soybean meal futures.

Price action: Lean hog futures started the day under pressure but posted a solid recovery into the close to finish 20 to 95 cents higher.

Fundamental analysis: Early pressure was tied to concerns about the pork market since yesterday's lower pork prices failed to spur improved pork movement. But traders remain hopeful pork demand will improve as grilling season begins, especially given high beef prices.

The cash hog market was mostly steady today as packers say they are having no difficulty securing this week's needs but want to keep kill lines running as full as possible and have begun securing next week's needs. The recent tightening of market-ready supplies is a welcome development given the abundance of pork in frozen storage.

Technical analysis: June lean hog futures gapped lower on the open and extended losses to challenge the psychological $91.00 level but filled the gap and closed high-range. The contract posted a new weekly high and a bullish daily reversal. Followthrough buying tomorrow would make bulls' next target the top of the mid-February gap at $94.05.

Hedgers: Carry all risk in the cash market for now.

Feed needs: NEW ADVICE: Lift the 2nd-qtr. coverage in long July corn futures and long July soybean meal futures. Carry all risk in the cash market for now.

 

 

Live cattle

Advice: Lift the 2nd-qtr. coverage in long July corn futures and long July soybean meal futures.

Price action: Live cattle futures settled slightly higher following a choppy day of trade. Most contracts ended near the middle of today's range.

Fundamental analysis: Cash cattle trade unexpectedly got started at $128 in the Texas, Oklahoma and Kansas early this afternoon, which gave futures a boost into the close. Still, traders resisted pushing April live cattle futures above the initial cash trade, signaling they have ongoing concerns with beef demand.

While moderate cash cattle trade occurred at $128, which was in the middle of last week's $127 to $129 range, some feedlots are still holding out for hopes of getting even better bids from packers. But given sluggish boxed beef movement and negative margins, it's unlikely traders will get too aggressive with cash bids after raising bids as much as $4 last week.

Technical analysis: June live cattle futures posted an inside day up following yesterday's wide trading range. Monday's high at $124.50 and yesterday's low at $122.40 are initial resistance and support. Stronger resistance and support are at $125.30 and $120.20, respectively.

 

Feeder cattle

Price action: Feeder cattle futures ended slightly lower today, but well off session lows.

Fundamental analysis: Feeder cattle futures were choppy today amid back-and-forth price action in live cattle and corn. While cash feeder cattle prices have strengthened recently, futures hold a premium to the cash index, which limits near-term upside potential.

Technical analysis: May feeder cattle futures again held within Monday's broad range. Monday's high at $147.70 is initial resistance, while Monday's gap from $146.00 to $145.07 1/2 is first support.

Hedgers: Fed cattle producers should carry all risk in the cash market for now. Feeder cattle sellers and buyers should also carry all risk in the cash market for now, but feeder cattle buyers should stay in touch to establish long coverage.

Feed needs: NEW ADVICE: Lift the 2nd-qtr. coverage in long July corn futures and long July soybean meal futures. Carry all risk in the cash market for now.

 

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