Livestock Analysis (VIP) -- March 11, 2013

March 11, 2013 09:33 AM
 

Hogs

Price action: Lean hog futures finished 37 1/2 to 87 1/2 cents lower today, which was anywhere from a low- to high-range close.

Fundamental analysis: April lean hog futures were pressured by the premium they hold to the cash market, especially given a steady to weaker tone in the cash market to start the week. Ongoing demand concerns weighed on deferred lean hog futures as traders fear a typical seasonal rally won't be seen this year.

Cash hog bids were steady to weaker on limited packer demand. With plants bought ahead on slaughter needs and packers working to improve margins, cash hog bids are expected to remain steady to weaker for at least the next couple days.

Technical analysis: The lower close in April lean hog futures today suggests the strong move up late last week was a correction. The contract must take out last week's high at $82.25 to signal an extended correction is underway.

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 5 to 57 1/2 cents higher, which was near a mid-range close for the day.

Fundamental analysis: Live cattle futures were supported by short-covering today, with the April contract leading gains as traders worked to push the lead-month contract to a slight premium to last week's cash trade. Typically, the lead-month contract would have some weather premium built in during winter, especially given tightening feedlot supplies this year, but demand concerns continue to limit traders' willingness to buy. Until demand concerns are eased, the upside remains limited to corrective buying.

Boxed beef trade got off to a sluggish start this morning as prices were mixed and packers moved only 64 total loads. Traders are closely monitoring boxed beef movement given the demand concerns.

Technical analysis: April live cattle futures have spiked support at the June low of $127.55 several times, but have respected that level on a closing basis. Contract-low support is at $125.90. Last week's high at $130.80 is key near-term resistance.

 

Feeder cattle

Price action: Feeder cattle futures closed with slight losses in most contracts.

Fundamental analysis: Strength in the corn market limited buying interest in feeder cattle today, more than offsetting spillover support from live cattle. Traders remain concerned about demand for cash feeder cattle.

Technical analysis: April feeder cattle futures posted an inside day today to hold just above last Friday's fresh contract low. A move to a new low would make the $140.00 mark bears' next downside target.

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