By John Simpson
The livestock markets have experienced significant price swings since February 3rd, with cattle and feeder cattle suffering sharp pullbacks while hogs have diverged, showing strength. As volatility grips the market, traders are watching key technical support and resistance levels to determine the next major moves.
In my opinion, the recent action highlights the importance of key price zones, as cattle and feeders test their floors while hogs push toward resistance. The question now is whether hogs can extend toward $100, and if cattle and feeders can confirm a reversal back toward previous highs.
Live Cattle: Big Support at $195 Holding Strong
April live cattle futures have been under pressure, testing key support at $195 multiple times. However, this level has held firm, signaling that the market is finding stability. In my opinion, this confirmed support is critical for live cattle, as a sustained hold above this level could set the stage for a recovery toward previous highs.
While initial selling pressure was fueled by bird flu headlines, the fundamentals of tight supply and strong packer demand remain intact. USDA reports confirm that the U.S. cattle herd remains at its smallest level since 1951, and frozen beef stocks are still below the five-year average. These supply constraints provide a bullish backdrop that, in my view, could support a strong rebound if technical levels continue to hold.
Feeder Cattle: Rebuilding After a Steep Sell-Off
The feeder cattle market saw a massive pullback on February 3rd, with March feeder cattle dropping toward $264, a key technical level that has since acted as support. This move lower mirrored weakness in live cattle, but in my opinion, the broader uptrend is still intact as long as this support holds.
That said, for the bullish trend to resume, we need to see March feeder cattle close above $268.40. A confirmed breakout at this level could pave the way for a rally toward $280, a price target I see as achievable given the supply-side constraints and the potential for a rebound in the broader cattle complex.
One factor to watch is feed costs, particularly corn prices, which have shown recent strength. If corn continues higher, it could pressure feedlot margins, creating a headwind for feeders. However, with tight supplies and strong demand, I believe any dips in feeder cattle should be viewed as potential buying opportunities.
Hogs: Profit-Taking Expected, but Is $100 Next?
Unlike cattle and feeders, the April lean hog futures market has shown strength, benefiting from the inverse reaction to cattle’s recent struggles. The market recently hit $95, a key resistance level where some profit-taking is expected.
The big question now is whether hogs can extend gains toward $100. In my opinion, while profit-taking could cause short-term consolidation, the overall trend remains supportive. With export demand holding firm and domestic supplies tightening, there is a case to be made for higher hog prices.
One factor to monitor is the U.S. dollar. A stronger dollar can pressure pork exports, potentially slowing the rally. However, if the dollar weakens, it could provide the catalyst needed for hogs to make a run toward triple digits.
Final Thoughts
The livestock markets are navigating a highly dynamic environment, with technical levels playing a crucial role in shaping price action.
- Live cattle have confirmed support at $195, setting the stage for a potential rebound.
- Feeder cattle need a close above $268.40 to confirm a renewed uptrend, with a price target of $280.
- Hogs are seeing profit-taking at $95, but a move toward $100 is possible if momentum holds.
With supply constraints in cattle and growing strength in the hog market, traders must remain vigilant and manage risk accordingly. As always, in my opinion, price action and key technical levels will determine the next major moves in these livestock markets.
“Until next time, may your trades be strategic, your risks well-managed, and your vision ever forward.”
Risk Disclosure & Disclaimer
As always, this is just my opinion and should not be considered as financial advice. Market conditions can change rapidly, and it’s essential to stay informed and manage risk accordingly.
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John S. Simpson Jr.
Senior Market Strategist
Walsh Trading
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