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Chicago Mercantile Exchange hogs could open up 20 to 60 points Tuesday on potential short covering and sizable Globex hog gains, said brokers and analysts.
Steady-to-higher cash hog expecations may motivate bullish traders. And modest U.S. stock market and electronic-Chicago Board of Trade corn advances might provide psychological back-month lean hog support.
However, futures' premium to CME's hog index and fading pork packer margins may limit potential lean hog upward momentum.
The Dow Jones packer margin index for Monday's operations was minus $8.92, compared with minus $1.54 the previous day. The operating margin index is derived from the USDA pork cutout values and western corn belt hog prices.
And hog futures are in the waning stages of the current Goldman roll period.
The Goldman roll, which began last Thursday and will conclude on Wednesday, consists of funds moving some of their June long positions into deferred contracts. The process is done in conjunction with Standard & Poor's Goldman Sachs Commodity Index guidelines.
May lean hogs could move within a narrow trading range as the contract prepares for its May 14 expiration date.
June has a chart gap between Friday's 67.60-cent low and Thursday's 67.40-cent high. June's 69.17-cent 20-day moving average is a resistance target.
July's 68.68-cent 10-day moving average is an area of support. The contract's 71.04-cent 20-day moving average is a resistance target.
Pork bellies may open mostly firm on late-Monday's supportive steady fresh belly quote at $85 and possible spillover lean hog futures backing.
The CME did not report any belly deliveries late Monday against May futures that will expire on May 26.
Participants may adjust positions before CME's weekly belly storage data on Tuesday at 5 p.m. EDT.
July's 78.44-cent 10-day moving average is a level of support. The contract's 80.25-cent Monday high is a price resistance area.
August's 79.53-cent 20-day moving average serves as a level of support. The contract's 81.29-cent 40-day moving average is a resistance point. Cattle Complex
Brokers and analysts expect CME live cattle to open up 10 to 30 points on buying follow through and future's slight discount to recent cash sales.
No fed cattle bids and asking prices were reported. Cash-basis cattle last week brought mainly $84 per hundredweight, compared with $85.50 to $86 fed cattle price averages the previous week.
Furthermore, beef packer margin's recovery stir cautious optimism for at least steady fed cattle prices this week.
The latest operating margin index for beef packers was plus $14.00 per head, compared with plus $6.60 the previous day, as calculated by HedgersEdge.com.
And bullish traders hope beef demand picks up heading into the approaching Memorial Day holiday.
The USDA's Monday evening boxed beef data showed choice cuts rose $0.37 per hundredweight, and select cuts up $0.04.
Traders keep an eye on U.S. stock markets and electronic-Chicago Board of Trade corn that show gains in early action.
Nonetheless, selling into rallies might develop tied to June and August mildly overbought Relative Strength Index conditions. Also, the migration by longs out of June into August will continue on the eve of the end of the current Goldman roll period.
June's 82.94-cent 20-day and 82.86-cent 40-day moving averages are areas of support. The contract's 83.64-cent 100-day moving average is a key resistance target.
August's 83.50-cent 40-day and 83.29-cent 20-day moving averages are support markers. The contract's 84.20-cent 100-day moving average is a resistance threshold.
Feeder cattle may open mixed on possible leftover buying and steady-to-higher feeder cattle cash returns versus potential profit taking and most contract premiums to CME's feeder cattle index.
Feeder cattle participants will monitor CBOT corn's 10:30 EDT outcry open after what analsyts viewed as a bullish USDA supply/demand report result for corn. The data was released Tuesday at 8:30 EDT.
May could move according to opinions about where the contract will settle after it expires on May 21.
May's 98.66-cent 20-day moving average is a technical support floor. The contract has a chart gap between Friday's 98.62-cent low and Thursday's 98.20-cent high.
May's 100.55-cent April 16 high is a price resistance target.
August's 100.75-cent May 8 high is an area of price support. The contract's 102.35-cent April 17 high is a price resistance point.
(To access the daily livestock market data recap report, keyword search for "Livestock Market Fundamental Data Recap.")
-By Theopolis Waters; Dow Jones Newswires; 312-341-5778; theopolis.waters@dowjones.com
(END) Dow Jones Newswires
05-12-09 0935ET
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