February live cattle closed up $1.60 on the week and are up $3.475 so far in November with bullish momentum headed into Thanksgiving week. Friday's close of $137.70 is the highest in over two months and is finding encouragement from last week's higher cash trade, showing the highest dressed prices in four years. After enduring extreme financial pain, stemming from COVID-19 in 2020 and followed by higher feed costs and drought-induced liquidation in 2021, cattle producers are finally seeing a chance for more profitable prices ahead. Technically speaking, on a monthly chart, February cattle prices have broken above major resistance near $130 and are sustaining an uptrend with signs of a healthier balance in the cash market and an active pace of slaughter.
January feeder cattle closed up $3.20 at $160.92. So far in February, feeder prices are up $4.80 on the month and appear to be forming a bullish reversal, just in time to sustain this year's uptrend. Feeder cattle have encountered mixed influences this fall with higher corn prices weighing on feeders, while increased packer demand for live cattle support feeder prices. On a daily chart, January feeder cattle have resistance at $163.12, the October high and just above the 100-day average at $162.20. On the monthly chart, the trend of prices is higher with support at $153.00, the site of the one-year average; $160 held as resistance for five years but is now showing signs of losing its ability to keep prices contained.
February lean hogs closed up $1.92 last week, ending at $82.47 Friday and slightly above the 100-day average at $82.25. Cash hog prices reached a six-year high of $122.06 in early June and have been falling lower for five months. With cash prices now down 40% from the high, futures prices are picking up and showing signs of support, helped by an active slaughter pace and import interest from China. Technically speaking, February hogs have resistance at $88.00 on a daily chart. The monthly chart shows prices in an uptrend, holding support above the one-year average at $80.00. Seasonally, cash hog prices tend to trade higher from November to May. February futures prices have been turned back at $90 twice in the past three years.
Comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of grain or grain futures or options involve substantial risk and are not suitable for everyone.
Todd Hultman can be reached at: Todd.Hultman@dtn.com
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