October Lean Hogs opened higher and made the session low at 79.45. It grinded higher the rest of the session to the high at 80.924. It settled near the high at 80.55. The rally took price past resistance at 80.45 as the high and settlement was above it. Hogs continue to surprise with its positive price action, diverging from the path of the cash market that has seen cutouts and cash prices move lower over the past couple of weeks. Traders must feel consumers will probably consume more pork in the coming days as pork prices remain cheap compared to rising retail beef prices. Slaughter levels are rising and with weights high, production continues to rise which could eventually temper the rise in futures. If price breaks down from settlement, we could pullback and test support at 79.80. Support then comes in at 78.80, 77.80 and 76.175. If price holds settlement, we could test resistance at 81.70. Resistance then comes in at 83.325.
The Pork Cutout Index decreased and is at 96.79 as of 08/22/2024.
The Lean Hog Index decreased and is at 88.83 as of 08/21/2024.
Estimated Slaughter for Friday is 479,000, which is above last week’s 464,000 and last year’s 465,135. Saturday slaughter is expected to be 96,000, which is below last week’s 123,000 and last year’s 155,015. The estimated total for the week (so far) is 2,503,000, which is below last week’s 2,512,000 and above last year’s 2,494,335.
October Feeder Cattle opened higher, made the session low at 233.725 and the rallied to the high at 235.80. It worked lower into the close and settled at 234.375. The session was a low volume affair as traders, exhausted from the volatility over the past few weeks, let the session drift as they waited for the Cattle on Feed report which was released after the close. The rally tested resistance at 235.95 and the early low tested support at 233.10. If price can’t hold settlement, we could re-test support at 233.10. Support then comes in at 231.175. If it holds settlement, it could re-test resistance at 235.95. Resistance then comes in at 237.25.
The Feeder Cattle Index decreased and is at 241.70 as of 08/22/2024.
October Live Cattle opened higher and made the low at 175.425. It worked its way to the high at 176.625 and then pulled back, settling near the low at 175.70. The action formed an inside candlestick as traders waited for the Upcoming Cattle on Feed Report. Cash trading was at a minimum as it finished early in the week as packers were able to take advantage of the early week breakdown in the futures market. The report was in my opinion neutral as the numbers came in in line with analysts’ expectations, but some may consider a 2% differential in the placement figure slightly bearish. I don’t think the differential mattered all that much. Settlement was below the key level at 1975.95 so you can assume bearish traders won the day. If price can’t hold settlement, it could re-test support at 174.425. Support then comes in at 172.75. A rally past the Friday high could see price move towards resistance at 178.10. Cattle on Feed is down below…
Boxed beef cutouts were mixed as choice cutouts increased 1.35 to 317.34 and select decreased 1.57 to 300.46. The choice/ select spread widened and is at 16.88 and the load count was 126.
Friday’s estimated slaughter is 113,000, which is below last week’s 118,000 and last year’s 121,051. Saturday slaughter is expected to be 11,000 which is above last week’s 8,000 and below last year’s 14,767. The estimated total for the week (so far) is 608,000, which is above last week’s 602,000 and below last year’s 626,595.
The USDA report LM_Ct131 states: Thus far for Friday all trading regions negotiated cash trade has been mostly inactive on light demand. On Wednesday in Texas Panhandle live FOB purchases traded at 183.00. Last week in Kansas live FOB purchases traded at 185.00. Last week in Nebraska live FOB purchases traded at 190.00. The most recent dressed delivered market in Nebraska was Tuesday with purchases from 293.00-295.00 mostly at 295.00. The most recent market in the Western Cornbelt was Tuesday with live FOB purchases traded at 187.50, while dressed delivered purchases traded from 293.00- 295.00, on a light test.
The USDA is indicating cash trades for live cattle from 182.00 – 190.00 and from 288.00 – 295.00 on a dressed basis (so far).
United States Cattle on Feed Up Slightly
Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.1 million head on August 1, 2024. The inventory was slightly above August 1, 2023.
Placements in feedlots during July totaled 1.70 million head, 6 percent above 2023. Net placements were 1.65 million head. During July, placements of cattle and calves weighing less than 600 pounds were 390,000 head, 600-699 pounds were 265,000 head, 700-799 pounds were 385,000 head, 800-899 pounds were 387,000 head, 900-999 pounds were 200,000 head, and 1,000 pounds and greater were 75,000 head.
Marketings of fed cattle during July totaled 1.86 million head, 8 percent above 2023.
Other disappearance totaled 56,000 head during July, 14 percent below 2023.
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, August 27, 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
888.391.7894
Fax: 312.256.0109
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