CME hog futures likely to see boost on bullish markets

 

 

Bullish market fundamentals and profit-taking by traders who were short back-month CME hogs Wednesday (April 14) are likely to give futures a lift.

 

Wholesale pork carcass prices Wednesday moved up US$1.17 per hundredweight, their 10th straight increase, and nudged pork packer profits into double-digits for the first time since January 25.

 

Steady-to-higher cash hog prices might inspire those who are betting on near-term lean hogs advances. Meanwhile, spot-April will be dictated by opinions about where it and CME's lean hog index will merge after spot-month expiration Thursday at 1 p.m. EDT.

 

From a technical standpoint, April hogs have a Relative Strength Index reading of 73%. Any contract's RSI signal above 70% makes that month susceptible to selling because it has become rather overpriced.

 

Also April is hovering over the 76.09-cents 10-day moving average support level.  Most-actively traded June's 84.37 10-day moving average serves as an area of chart support. July hangs above its 83.30 20-day moving average support floor and is poised to take out the 84.74 10-day moving average resistance target.

 

CME pork bellies are seen higher after fresh belly prices soared US$5 per hundredweight to US$100 Wednesday, which may spark short-covering following futures' tumble in the same session.

 

May bellies Wednesday settled between 93.08-cents 40-day moving average support and 95.35 20-day moving average resistance boundaries. July is beneath the 95.61 40-day moving average resistance threshold.

 

On the other hand, pit-traded CME live cattle are seen mainly firm based on futures' price discounts to this week's cash cattle sales and potential short-covering after the market's three-day losing streak.

 

Packers bought cash-basis cattle this week for US$99 to mostly US$100 per hundredweight versus US$100 to US$102 last week. The bulk of cattle for this week is believed to have been sold with only cleanup business expected.

 

According to data compiled by the US Meat Export Federation, US beef and pork exports rebounded in February, topping year-ago sales after a slow start in January.

 

A generally higher CME feeder cattle start is anticipated featuring short-covering and the chance of buying in the neighbouring live cattle pit.

 

Also, futures are now at discounts to CME's feeder cattle index which may appeal to prospective bullish traders.

 

The April feeder cattle contract is sandwiched between 110.12-cents 20-day and 112.53 10-day moving average support and resistance levels; while May's 111.51 20-day moving average is a point of technical support. The contract's 113.75 10-day moving average serves as a chart resistance mark.