Livestock Analysis (VIP) -- February 26, 2013

February 26, 2013 08:26 AM
 

Hogs

Price action: Lean hog futures saw two-sided trade today and ended at or near session highs with gains of 27 1/2 to 70 cents, with the exception of the April contract which closed 32 1/2 cents lower for the day.

Fundamental analysis: While the front-month contract remained under pressure due to ongoing weakness in the cash market as packers are having no trouble securing supplies, ideas pork demand will improve in the months ahead gave deferred contracts a boost today. Besides being due for a seasonal rebound in ham buying for Easter, some expect that if sequester comes to pass, that could cause consumers to favor "cheaper" meats, such as pork or poultry.

Deferred contracts also benefited from efforts to correct the technically oversold condition of the market. Most contracts are still oversold according to the 9- and 14-day Relative Strength Index.

Technical analysis: April lean hogs saw a quiet day of trade. Near-term support remains at yesterday's low of $80.90, while the contract must move above the September low of $84.07 1/2 to signal it has put in a low.

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

Feed needs: Profits have been claimed on 1st-qtr. feed coverage that was held in March corn and meal futures. 25% of 2nd-qtr. corn needs are covered in long July corn futures at $6.78 3/4 and 25% of 2nd-qtr. protein needs are covered in long July soymeal futures at $388.00.

 

Live cattle

Price action: Live cattle futures ended 17 1/2 to 87 1/2 cents higher in all but the December contract, which was 12 1/2 cents lower. Futures finished high-range.

Fundamental analysis: Live cattle futures were mostly weaker this morning as demand concerns continue to limit buying interest. But supply disruption concerns tied to the winter storm that's blasting the Plains and Midwest sparked buying into the close. Still, the upside is limited to corrective gains unless demand concerns are eased.

Cash cattle trade remains uncertain this week, although feedlots and many traders are hopeful the cash market can build on the $2 higher trade that occurred late last Friday. Showlist estimates are still a little sketchy in some areas as feedlots try to dig out from the snow storm.

Technical analysis: April live cattle futures poked above support-turned-resistance at the January double-bottom of $129.45, but weren't able to close above that level. The contract was able to close above the 10-day Moving Avearge, however, suggesting a short-term low is in place. A close above $129.45 would confirm a short-term low and would open upside potential to the September low at $131.62 1/2. That level coincides with a 38% retracement of the price drop from the contract high to the recent low.

 

Feeder cattle

Price action: Feeder cattle futures close 32 1/2 to 45 cents higher and near session highs in most contracts.

Fundamental analysis: Feeder cattle futures pulled support from the live cattle market, though strength in corn limited buying interest. Cash feeder cattle prices continue to decline, though traders are uncertain how much impact on supplies there will be from the winter storm.

Technical analysis: April feeder cattle futures posted a contract low before rebounding to modest gains on the day. A close above the January double-bottom at $147.25 is needed to suggest an extended price recovery is underway.

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: Profits have been claimed on 1st-qtr. feed coverage that was held in March corn and meal futures. 25% of 2nd-qtr. corn needs are covered in long July corn futures at $6.78 3/4 and 25% of 2nd-qtr. protein needs are covered in long July soymeal futures at $388.00.

Back to news


Comments

 
Spell Check

No comments have been posted to this News Article

Corn College TV Education Series

2014_Team_Shot_with_Logo

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!

Markets

Market Data provided by QTInfo.com
Brought to you by Beyer
Close