October Lean Hogs opened lower and made the session low at 74.75. The low was just below support at the flattening 8-DMA now at 74.875. Price reversed from here and traded to the high at 77.275. The rally stalled below resistance at 77.80 and dipped lower to settle at 76.80. The rally was a reversal of the breakdown on Friday, putting price above the short-term moving averages, creating hope futures can move higher and take out resistance to challenge the July 25th high at 78.80. Hogs are in a tough position however as the cash market has been erratic with cutouts having peaked and are moving lower. The cash hog prices have also stalled with the index turning lower again. Slaughter levels are rising and exports were weak last week. We need exports to pick up again and keep cutouts from collapsing which would likely pressure cash prices. If price breaks down from settlement, we could pullback and test support at 76.175. Support then comes in at 75.60 and then 74.25. If settlement holds price could test resistance at 77.80. Resistance then comes in at 78.80.
The Pork Cutout Index ticked higher and is at 99.73 as of 08/16/2024.
The Lean Hog Index ticked lower and is at 90.09 as of 08/15/2024.
Estimated Slaughter for Monday is 483,000, which is even with last week and above last year’s 469,938.
September Feeder Cattle struggled on Monday, opening lower and trading to the low at 237.725. The breakdown tested trendline support at 237.825 and price was able to reverse course and rally to the session high at 240.825. The rally stalled just below resistance at 240.875 and price pulled back, approaching the low and it settled at 239.275, in the lower end of the range. The feeder index has been volatile and fell to a new recent low coming out after the close. If price can’t hold settlement, we could re-test support at 238.35 and then the rising trendline now at238.00. Support then comes in at 237.25. If it holds settlement, it could re-test resistance at 240.875. Resistance then comes in at 242.475.
The Feeder Cattle Index fell and is at 243.99 as of 08/16/2024.
October Live Cattle opened lower and made the low at 177.70. The low tested support at 178.10. In a choppy session, it traded just past resistance at the 200-DMA, now at 179.10 and just below the key level at 179.40 to the high at 179.325. It pulled back to challenge the low and then recovered to settle near the high at 179.025. Settlement was below the 200-DMA, keeping pressure on the bulls. Cash prices fell last week as the 5-area average dropped to 189.14. This is still well above futures and traders are likely going to try and narrow the differential between cash and futures as it is extremely wide with cash well above the futures price. If they are not able to get a rally going in futures, we could see cash prices come down some more as packers have regained their edge in the marketing of cattle, getting the north to give up much of their edge over the south. The Cattle on Feed report comes out on Friday and the anticipation of the report could keep the pressure on futures. If price can’t hold settlement, it could re-test support at 178.10. Support then comes in at 175.95. A rally past resistance at 178.10 could see price test resistance at the 100-DMA 179.975. Resistance then comes in at 181.175.
Boxed beef cutouts were lower as choice cutouts decreased 1.90 to 315.55 and select decreased 0.58 to 302.01. The choice/ select spread narrowed and is at 13.54 and the load count was 135.
Monday’s estimated slaughter is 117,000, which is above last week’s 112,000 and below last year’s 122,983.
The USDA report LM_Ct131 states: Thus far for Monday in all trading region negotiated cash trade has been at a standstill. Last week in the Southern Plains live FOB purchases traded at 185.00. Last week in Nebraska live FOB purchases traded at 190.00 and dressed delivered purchases traded from 298.00-301.00. Last week in the Western Cornbelt live FOB purchases traded from 187.00-191.00 and dressed delivered purchases traded from 296.00-298.00.
The USDA is indicating no cash trades for live cattle and on a dressed basis (so far).
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, August 20, 2024, at 3:00 pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
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