Livestock Analysis (VIP) -- March 26, 2013

March 26, 2013 09:38 AM
 

Hogs

Price action: Lean hog futures closed $1.02 1/2 to $1.07 1/2 higher in the April and May contracts, respectively, while gains in other contracts ranged from 27 1/2 to 95 cents. Futures finished anywhere from low-range to high-range on the day.

Fundamental analysis: Support in the hog market was threefold today. Fundamentally, unexpected cash strength in some locations gave futures a boost, as did expectations that pork demand should start to strengthen seasonally. Additional support came from short-covering as traders are readying positions for Thursday afternoon's Quarterly Hogs & Pigs Report.

Cash hog bids were steady at most locations today, but some unexpected scattered firmer bids were noted across the Midwest. That would suggest packers aren't as bought ahead on slaughter needs as they've led on and/or they are expanding kill operations to take advantage of profitable margins.

Technical analysis: June lean hog futures have posted five consecutive higher closes and are well off last week's low. To confirm the move higher is more than a modest correction in a bear market, however, the contract must clear the last correction high at $92.12 1/2 and complete a 38% retracement of the price plunge from the contract high to last week's low around $92.75.

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 got off to a choppy start, but the market softened as the day progressed to finish near session lows with losses of 27 1/2 to 50 cents.

Fundamental analysis: Beef market concerns were back in focus today after the market saw a weak rebound on the Cattle on Feed Report data yesterday. Boxed beef prices softened yesterday and this morning, though this did encourage stronger movement. The delayed start to spring grilling season and historically high beef prices paired with an increase in taxes and lofty gas prices for U.S. consumers are making it tough for the product market to put in a low.

But downside risk should be limited by tight showlist estimates this week and tightening supply prospects for the rest of the year. Packers have not yet established initial cash cattle bids for this week.

Technical analysis: April live cattle futures nearly matched yesterday's trading range, leaving near-term resistance at the top of the March 15 downside gap at $128.80 and support at last week's low of $124.75.

Feeder cattle

Price action: Feeder cattle futures ended mixed, with nearby contracts up 12 1/2 to 20 cents and deferred contracts slightly lower.

Fundamental analysis: Feeder cattle futures saw light bull spreading today amid weakness in the corn market. While tightening supplies are supportive, there are concerns about demand for feeder cattle going forward.

Technical analysis: April feeder cattle futures traded in a very narrow range today, as has been the trend in recent sessions. The next level of resistance for the contract stands at the psychological $140.00 mark, while contract-low support is at last week's low of $136.77 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.

 

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