Technically Speaking

As is the case for many commodities in early 2022, April lean hog prices have been on the rise lately, closing up another $2.15 on the week, the highest weekly close yet for the contract. What is interesting, however, is the contract hit a peak of $107.70 on Thursday and dropped lower the final two days of the week. For the April contract, the first attempted challenge of last year's high of $104.25 failed, but the setback is likely to be temporary. Last week's pork carcass value increased $12.55 to $109.96, the highest price since October and slaughter was up 71,000 on the week to 2.516 million head. This year's lower hog numbers, along with improving retail demand, are proving to be a bullish combination and if prices do surpass the 2021 high at some point, it will be their highest levels since 2014. Noncommercial net longs totaling 66,642 are riding the bullish trend in hogs, but the more stressful positions are the 47,488 shorts speculators are holding.

April live cattle also closed lower the final two days of last week, ending down 70 cents Friday and for the week at $146.17. Although prices were pushed back from a high of $148.70, it is not a bearish concern yet as it was the highest price an April contract has seen in six years. Cash prices were mostly steady to $2 higher last week and have been helped lately by gradual increases in the slaughter pace. Even though cash cattle prices are near their highest prices in over four years, packers continue to be profitable and have been bidding more actively since October, suggesting the long period of herd liquidation has brought more balance to the market. April cattle continue to trend gradually higher with support at $141.00, the site of the 100-day average.

March feeder cattle ended up 12 cents last week at $166.22, held up by an improving cattle market, but also limited by rising corn prices and ongoing concerns about dry weather in South America. Prices have been chopping within a sideways range the past two months and are staying below the August high of $171.57, the only resistance keeping prices from a new six-year high. March corn prices trading near their highest levels in eight years have been a strong deterrent to higher prices of feeder cattle lately, so it is impressive that feeders are staying well supported. March feeders are currently trading above the 100-day average at $163.00 and above the January low of $158.22. A close above the Aug. 24 high of $171.57, if it happened, along with any relief from high corn prices, would signal a bullish change.

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

Follow him on Twitter @ToddHultman1

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