Livestock Analysis (VIP) -- March 13, 2013

March 13, 2013 09:44 AM
 

Hogs

Price action: Lean hog futures settled in the lower half of today's trading range with losses of 65 cents to $1.05.

Fundamental analysis: Strength in the U.S. dollar index and concerns about pork demand encouraged selling in lean hog futures. The pork cutout value slid again yesterday, though the softer prices did encourage strong movement. Until the pork market improves seasonally, upside potential for the cash and futures markets will remain limited.

Cash hog bids were mostly steady today as supplies are plentiful. The $3-plus premium the April lean hog contract holds to the cash hog index added to the negative tone.

Technical analysis: April lean hog futures came within 2 1/2 cents of near-term support at the top of last week's big upside gap at $80.37 1/2. A move through that level would signal the contract is headed for a test of the contract low at $78.25. Initial resistance is at last week's high of $82.25.

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 were unable to hold earlier gains and finished mostly 15 to 50 cents lower, which was in the lower end of today's range.

Fundamental analysis: Uncertainty with cash cattle trade this week and ongoing demand concerns eroded buying interest late in the session. Traders are taking a prove-it attitude as the market works to put in a low.

Packers established initial cash cattle bids at $125 today, while feedlots are asking around $130 for this week's supplies. The late start to cash negotiations signals active cash cattle trade isn't likely until late tomorrow or Friday. Most traders are anticipating steady to slightly higher bids compared to last week's mostly $128 trade.

Technical analysis: Short-term trading boundaries for April live cattle futures are Monday's low at $127.10 and last week's high at $130.80.

 

Feeder cattle

Price action: Feeder cattle futures closed 10 to 65 cents higher, which was mid-range.

Fundamental analysis: Pressure on corn futures supported feeder cattle futures throughout today's session. But a late waning of buying interest in live cattle trimmed gains in feeders.

Technical analysis: April feeder cattle are hovering just above the contract low posted last Friday. Initial resistance is the top of the March 6 gap at $143.57 1/2 and then the March 1 high at $146.07 1/2.

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.

 

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