Livestock Analysis (VIP) -- March 18, 2013

March 18, 2013 10:03 AM
 

Hogs

Price action: Lean hog futures finished with losses of 27 1/2 to 72 1/2 cents. Futures ended anywhere from low- to high-range for the day.

Fundamental analysis: Lean hog futures faced light pressure throughout today's session. Outside markets were price-negative and the cash hog market was weaker, which combined to limit buying interest.

Cash hog bids were steady to $1 lower at most locations on limited packer demand. Most plants are bought ahead on slaughter needs and are hoping to improve margins, which are tight. As a result, near-term demand for cash hogs is expected to remain limited.

Technical analysis: After posting a solid corrective rebound March 7-8, April lean hog futures have been sliding. Contract-low support lies at $78.25.

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 closed 5 to 27 1/2 cents higher, which was a mid- to upper-range close for the day.

Fundamental analysis: Live cattle futures faced pressure from outside markets for much of the day as traders reacted to euro-zone news. But selling interest dried up enough late to allow futures to finish higher amid light short-covering.

Demand concerns also continue to hang over the market. While boxed beef prices were firmer this morning, movement was light. Unless the boxed beef market shows a pick up in movement, packers will be reluctant to pay steady to firmer prices for cash cattle compared to last week's $127 trade in the Plains.

Technical analysis: April live cattle futures posted a modest inside day up on the daily chart. Old support at $127.90 is initial resistance. But the contract must push above the January double-bottom at $129.45 to signal a short-term low is in place.

 

Feeder cattle

Price action: Feeder cattle futures finished in the upper end of today's range with gains of 2 1/2 to 30 cents.

Fundamental analysis: Feeder cattle futures stood up to outside market pressure for much of the day on support from weakness in corn and short-covering. But buying interest was limited by the overall risk-off stance.

Technical analysis: April feeder cattle futures posted a new contract low before working slightly higher. Bulls must clear the downtrend from the January highs to signal a low is in the works. That trendline intersects around $142.10 Tuesday.

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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