Live cattle
Price action: Live cattle finished steady to 42 1/2 cents higher following a light day of trade.
Fundamental analysis: Futures were mildly supported by short-covering today amid ideas the downside had been overdone. But the upside was limited to mild corrective buying given uncertainty surrounding this week’s cash cattle trade. With feedlots not likely to raise cash cattle bids with a shortened slaughter schedule ahead and feedlots not likely to be eager to sell cattle at prices much below week-ago, cash cattle trade is not expected until late in the week. And some cash sources are questioning whether active trade will even be seen this week or if both sides will wait until next week to conduct serious cash negotiations.
Technical analysis: October live cattle futures posted an inside day up on the daily chart and remain in the downtrend from the Aug. 15 high. Monday’s low at $123.40 is initial support, followed by July 26 low at $122.15. Strong support is around the $120.00 area.
Feeder cattle
Price action: Feeder cattle futures finished 2 1/2 to 95 cents higher, but closed well off of the highs for the day.
Fundamental analysis: A generally weak tone in the corn market encouraged light short-covering in feeder cattle today. Also supportive was strength in cash feeder cattle prices in the Plains, suggesting demand for calves may be increasing as feed prices have somewhat stabilized recently, although they remain historically high.
Technical analysis: Key near-term resistance for October feeder cattle stands at the Aug. 15 high of $145.95. A push above that level is likely to attract fresh chart-based buying.
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.
Feed needs: Risk is covered in the cash market for now.
Hogs
Price action: Lean hog futures saw a quietly traded session and ended narrowly mixed. October hogs ended steady, with December through May futures down 5 to 30 cents. Far deferred contracts ended steady to 50 cents higher.
Fundamental analysis: Pressure on nearby lean hog contracts was limited by the already steep discount those contracts hold to the cash index. But given recent steep pressure on the pork cutout market, traders were hesitant to do more than cover short positions.
The cash hog market was down $1 to $1.50 at many locations today, with some offering even lower bids due to plentiful supplies. Traders are concerned the seasonal increase in supplies along with increased sow slaughter will result in stepped up pressure on the cash market near-term. As a result, traders are comfortable with some discount in nearby futures relative to the cash market.
Technical analysis: December lean hog futures posted a quiet, inside day of trade on the daily chart, hovering just above contract-low support of $70.45. Initial resistance is at the top of the Aug. 22 gap at $73.00.
Hedgers: Carry all risk in the cash market for now.
Feed needs: Risk is covered in the cash market for now.
