Hogs
Price action: October lean hogs ended 15 cents higher while deferred months settled 15 cents to $1.40 lower with deferred months leading to the downside.
Fundamental analysis: While the front-month contract benefited from ideas a seasonal low may be near, the rest of the market was again pressured by burdensome supplies. Supplies are expanding seasonally, plus high feed costs have encouraged active sow liquidation. This has kept both the pork and the cash hog market pointed steadily lower, despite what is shaping up to be a very strong month in terms of pork production and solid packer profit margins.
Technical analysis: October lean hog futures traded in a narrow range today and closed high-range. Followthrough buying would have bulls eying last week’s high of $75.20. But if the contract joins the rest of the market in trending lower, near-term support is last week’s contract low of $70.45.
Hedgers: Carry all risk in the cash market for now.
Feed needs: Risk is covered in the cash market for now.
Live cattle
Price action: Live cattle futures closed 10 cents to $1.35 higher, with nearbys leading gains and posting a high-range close. Deferred futures ended mid-range.
Fundamental analysis: Live cattle futures rallied into the close amid expectations tightening supplies will force packers to raise bids this week. Feedlots passed on initial bids of $122; they are asking $126 for cattle this week due to a tighter showlist and high feed costs. As a result, cash negotiations may drag on until later this week.
The boxed beef market is off to a mixed start, although movement has remained strong, which could increase packer demand for cattle later this week.
Technical analysis: October live cattle futures moved to their highest level since late March, but they need a close above the August high of $127.22 1/2 to signal the contract has posting an upside breakout from the long-lasting consolidation range.
Feeder cattle
Price action: Feeder cattle futures closed 7 1/2 to 30 cents lower, with nearbys leading losses.
Fundamental analysis: Futures were weaker despite weakness in the corn market, as traders are hesitant to push nearby futures too far ahead of the cash index, which currently stands at $142.91.
Technical analysis: October feeder cattle futures remain in a gradual uptrend from the July low, with resistance at last week’s high of $147.80.
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.
