Livestock Analysis (VIP) -- December 13, 2012

December 13, 2012 08:35 AM



Price action: Lean hog futures saw a choppy day of trade and ended likewise, with most contracts favoring the upside.

Fundamental analysis: Lean hog futures enjoyed light short-covering today thanks to improvement in the cash hog market. Bids were mostly steady with a few higher bids as profitable margins have given packers reason to keep kill lines full and some are still in need of supplies late this week in addition to supplies for a big kill next week.

Consistent strong pork movement and USDA's data showing record-high pork exports (volume and value) for October also provided light support, though this was somewhat offset by recently softer pork cutout prices.

Technical analysis: February lean hog futures settled mid-range, after hitting a new high of $86.25 for the week that marks near-term resistance. Strong support lies at the December low of $83.20.

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

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

Live cattle

Price action: After enjoying gains most of the morning, live cattle futures softened around midday and ended 15 to 37 1/2 cents lower for the day in the December through August contracts, with far-deferred futures narrowly mixed.

Fundamental analysis: Futures enjoyed support from ideas strong beef movement and tighter showlist estimates may support the cash market this week, but live cattle softened late in the session as traders recognize futures are already at a premium to last week's $124 cash trade on the Plains. Also, mixed boxed beef prices this week may not be enough to get packers to raise bids as they continue to cut in the red.

Technical analysis: The February contract settled even with yesterday's low, which narrowly saved it from posting a bearish reversal for the day. Nevertheless, the low-range close gives bears the near-term advantage with support layered from last week's high of $131.35 to the psychological $130.00 mark. Resistance remains at Tuesday's high of $132.50.


Feeder cattle

Price action: Feeder cattle futures moved well off their early gains into the close to end low-range and mostly 12 1/2 to 37 1/2 cents higher for the day.

Fundamental analysis: Feeder cattle futures benefited from solid followthrough buying early today thanks to ongoing weakness in the corn market. But the market's rally to levels last seen in July encouraged profit-taking as did a pullback in live cattle and dollar strength. Also limiting buying interest is the fact the front-month contract is at a sharp premium to the cash index.

Technical analysis: January feeder cattle futures reversed course just ahead of the psychological $154.00 level that coincides with the July 11 high, marking it as strong resistance. Support is layered from the top of yesterday's upside gap at $152.40 to the psychologically significant $150.00 level.

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.

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

Back to news


Spell Check

No comments have been posted to this News Article

Corn College TV Education Series


Get nearly 8 hours of educational video with Farm Journal's top agronomists. Produced in the field and neatly organized by topic, from spring prep to post-harvest. Order now!


Market Data provided by
Brought to you by Beyer