Livestock Analysis (VIP) -- March 20, 2013

March 20, 2013 09:51 AM
 

Hogs

Price action: Lean hog futures were under pressure for much of today's session and closed lower in all but the June contract, which finished 22 1/2 cents higher. Despite the losses, futures ended high-range as traders covered short positions late.

Fundamental analysis: Lean hog futures continue to be pressured by demand concerns amid weakness in the product market and export concerns. Additionally, a weak cash market is keeping futures on the defensive. Until these fundamental concerns ease, the upside is limited to mild corrective buying.

Cash hog bids were steady to weaker again today amid light packer demand. With plants bought ahead on slaughter needs and a holiday-shortened slaughter schedule next week, the cash hog market is likely to remain under pressure near-term. As a result, traders are reducing the premium spring-month futures hold to the cash index.

Technical analysis: April lean hog futures gapped to a new contract low, but filled that gap amid the late-session short-covering. Today's low at $76.90 is near-term support, followed by the November low of $76.65 on the weekly continuation chart. A drop below that weekly chart support would open the downside to the 2012 low at $70.45. To the upside, bulls need consecutive higher closes above old support at $79.50 to signal a move up is more than a modest correction.

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: After a weaker start, live cattle futures firmed amid short-covering on ideas the downside was overdone and ended 30 to 95 cents higher.

Fundamental analysis: Early pressure came on followthrough from yesterday's losses that resulted in new lows for nearby contracts. But ideas the downside was overdone triggered short-covering into the close today. Positive outside markets also provided support, as weakness in the dollar index resulted in widespread buying in the commodity world.

But limiting buying enthusiasm was news that cash cattle trade was picking up at $124 to $125 in the Southern and Central Plains, which is down around $2 from last week. April live cattle ended the day at about a dollar premium to the top of this week's cash range, which suggests traders believe a near-term low should be near.

Technical analysis: April live cattle posted a fresh contract low of $124.75 (which is initial support) before rallying into the close. The high-range close gives bulls momentum heading into tomorrow's open. A 25% retracement of the decline from the December high to the March low lies near $128 and is the first step in signaling a low has been posted.

 

Feeder cattle

Price action: Feeder cattle futures remained under pressure throughout the day, although finished off session lows. Futures ended 10 to 90 cents lower.

Fundamental analysis: Feeder cattle were unable to garner much spillover from live cattle due to strength in the corn market. Concerns that tight feed supplies will keep calf demand light has only been able to garner the support of bottom pickers.

Technical analysis: April feeder cattle gapped to a fresh contract low and extended losses before filling the gap. Futures need to fill the March 15 gap at $141.25 to signal a near-term low is in the works.

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