For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, February 25, 2025, at 3:15 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.
April Lean Hogs opened unchanged and traded to the high of the day at 89.15. The rally failed and it traded to the low at 87.60. It made an attempt to bounce off the low, but that failed and price found its way back to the lows and settled just above it at 87.65. The cutout continues to be a drag on the pork industry as the decline in the index continued to pressure futures despite a surge in the morning cutout. I think traders believed the afternoon cutout would reverse the strength seen early as the bulk of the increase was in the Belly. All sections of the cutout were higher in the morning helping firm the price and the load count was large especially for a Friday. Well… the Belly did fall back some but all sections remained in positive territory on the afternoon report and the load count surged, indicating that the retail industry likes where prices are and didn’t want to miss out on some cheaper pork. I think this could improve sentiment for futures next week even with a dip in the cash index expected for Monday. Maybe the pull-back in the cutout was temporary and will head to loftier levels as we move forward. Slaughter continues to sag and with the lower production expected from the lower numbers could also push prices higher. The lower slaughter numbers continue to reflect badly on the USDA’s expectations for higher hog numbers, in my opinion. If the numbers aren’t there for hog supply, the packer may continue to aggressively pursue hogs to get their supplies in order. The breakdown in futures took price below support at 88.325. Price needs a quick turnaround in my opinion or we could see lower futures prices in the near term. We’ll see!… A breakdown from settlement could see price test support at 87.10 and then the rising 50-DMA is next at 86.45. If price can overcome the key level at 88.325 it could re-test the Friday high. A rally past here could see price test resistance at 90.40.
The Pork Cutout Index decreased and is 98.48 as of 02/20/2025.
The Lean Hog Index increased and is at 91.22 as of 02/19/2025.
Estimated Slaughter for Friday is 481,000, which is above last week’s 478,000 and last year’s 480,039. Saturday slaughter is expected to be 125,000, which is above last week’s 92,000 and below last year’s 140,953. The estimated total for the week (so far) is 2,536,000, which is above last week’s 2,529,000 and last year’s 2,576,946.
March Feeder Cattle opened higher and made the session low at 266.825. Price changed direction and rallied to the high at 268.85. It fell asleep and drifted the rest of the session and settled in the middle of the day’s range at 267.95. The price action was within Thursday’s trading range forming an inside candlestick as traders awaited the upcoming Cattle on Feed Report which came out after the close on Friday. It also traded within the 266.95 to 269.00 support/ resistance band. It settled just above the key level at 267.775. The Cattle on Feed report is below and the numbers are neutral to bullish in my opinion. A breakdown from the low could see price retest support at the rising 50-DMA, which is at 265.975 and then the key level at 264.675. Support then comes in at 262.075. If settlement holds, we could re-test resistance at 269.00. Resistance then comes in at the 21-DMA now at 270.40 and then 271.00. We’ll see!…
The Feeder Cattle Index ticked higher and is at 278.24 as of 02/20/2025.
April Live Cattle opened higher and traded to the session low at 193.575. It reversed and raced to the high at 194.50. It drifted lower and the tried to rally to a new high but stopped at the high and then pulled back to settle at 193.95. It was a day of rest for the cattle market after making new lows for the recent down move earlier in the week. Traders were wary of the lack of cash trades and the Cattle on Feed report due out after the close. Cash weakened again this week, trading below 2bucks as packers have temporarily regained control of the cash market. With cutouts breaking down, the packer had no incentive to be aggressive and once again cut back on slaughter and weren’t in any hurry to buy cattle in front of the report. Maybe they will trade more Friday afternoon, but cash is mostly done for the week with low numbers traded. Packers haven’t been able to jettison cutouts with the low slaughter numbers as retailers are in no hurry to buy beef during this seasonal down turn. Slaughter declines are also seasonal but these numbers are causing some concern for certain analysts whom believe this will back up cattle supply into the spring buying season, keeping pressure on the producer. Producers believe the low slaughter is taking place because the packer is having a hard time finding cattle and the low slaughter numbers reflect this and won’t have any serious effect on cattle prices down the road. Most guys I speak with believe cattle prices will surge again into the summer like we have seen the past 2 years. We’ll see!… Futures traded below the 50-DMA (195.475) for the third day in a row and settled right at the key level at 193.95. If price can’t hold settlement, a breakdown could lead to a test of support at 193.225 and then 192.70. Support then comes in at 192.05. If price can hold settlement, we could see price test resistance at the 50-DMA and then the declining 13-DMA now at 196.275. Resistance then comes in at 196.625.
Boxed beef cutouts were lower as choice cutouts decreased 1.86 to 310.77 and select decreased 0.62 to 302.56. The choice/ select spread narrowed and is at 8.21 and the load count was 174.
Friday’s estimated slaughter is 107,000, which is above last week’s 100,000 and below last year’s 118,834. Saturday slaughter is expected to be 9,000, which is above last week’s 7,000 and last year’s 1,640. The estimated total for the week(so far) is 563,000, which is above last week’s 561,000 and below last year’s 590,486.
The USDA report LM_Ct131 states: In Kansas, negotiated cash trade has been mostly inactive on very light demand. In the Texas Panhandle, Nebraska and the Western Cornbelt, negotiated cash trade has been light on light demand. Not enough purchases in any region for a full market trend. The last reported market in the Southern Plains was Thursday with live FOB purchases at 199.00. Thursday in Nebraska, live FOB purchases traded from 199.50-200.00 and dressed delivered purchases traded at 315.00. The last reported market in the Western Cornbelt was last week, with live FOB purchases at 203.00 and dressed delivered purchases traded from 320.00-321.00.
The USDA is indicating cash trades for live cattle from 198.00 – 201.00 and from 313.00 – 320.00 on a dressed basis (so far).
United States Cattle on Feed Down 1 Percent
Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 11.7 million head on February 1, 2025. The inventory was 1 percent below February 1, 2024.
Placements in feedlots during January totaled 1.82 million head, 2 percent above 2024. Net placements were 1.76 million head. During January, placements of cattle and calves weighing less than 600 pounds were 365,000 head, 600-699 pounds were 395,000 head, 700-799 pounds were 505,000 head, 800-899 pounds were 382,000 head, 900-999 pounds were 105,000 head, and 1,000 pounds and greater were 70,000 head.
Marketings of fed cattle during January totaled 1.87 million head, 1 percent above 2024.
Other disappearance totaled 60,000 head during January, 26 percent below 2024.
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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