October Lean Hogs gap opened higher, at the high of the day (82.475) and fell apart. The open was just above resistance at the declining 21-DMA (82.475) and below the 200-WMA (82.775). This proved too be too tough for Hogs to overcome and price traded lower the rest of the session, making the low at 80.40. The low was just below support at 80.45 and settlement was above it at 80.625. The breakdown ate up most of Friday’s rally and puts Hogs back on dangerous footing, in my opinion. With the cash market struggles continuing as both indices are declining, Bears were able to reassert their dominance in the market. If they are able to take out the August 16th low, it confirms a burgeoning downtrend and could see more panic selling from bulls. A failure below the Monday low could lead to a test of the 79.80 support level. Support then comes in at 78.80. If Hogs hold settlement, it could test resistance at the declining 13-DMA, now at 81.175. Resistance then comes in at 81.70.
The Pork Cutout Index decreased and is at 107.76 as of 8/18/2023.
The Lean Hog Index decreased and is at 99.61 as of 8/17/2023.
Estimated Slaughter for Monday is 478,000, which is above last week’s 461,000 and below last year’s 482,000.
September Feeder Cattle reacted positively to the Cattle on Feed report from Friday and a weakening corn market. It gap opened higher and then pulled back to the low of the day at 249.20. The gap remained with Friday’s high the bottom of the gap at 248.825. It traded to the high at 250.95 and drifted the rest of the session to settle near the high at 250.325. September is just about at the end of its life as the lead contract as its volume is below the October contract. It is still a viable spec vehicle as we don’t have to worry about 1st notice day/ delivery. Futures have to continue higher in my opinion or it is in danger of changing over into a short-term downtrend for the September contract. Taking out the Friday low (245.875) before trading above 254.30 will confirm this in my opinion. Continued strength will face resistance at 251.30 and then 252.325. A failure from settlement could see the low revisited and a potential gap close.
The Feeder Cattle Index increased and is at 245.23 as of 8/18/2023.
October Live Cattle gap opened higher and pulled back to Friday’s high at 179.30 to close it down. It rallied to the high of the day at 180.50 by 9:30 CDT and that’s it. It consolidated the rest of the session and settled at 179.875. The rally stopped at the 21-DMA (180.50) and settled below the 8-DMA at 180.15. The excitement was over for the somewhat bullish Cattle on Feed report and the pullback was simply because it is too early in the week for cash trading and the effects of reports haven’t been having lasting importance in the grand scheme of trading, in my opinion. The price action formed a Doji candlestick, indicating indecision in the market, in my opinion. A failure below settlement could see the low revisited. A breakdown below the low could see price test support at 178.10. A rally above the high could see price test resistance at 181.175. Resistance then comes in at 182.575.
Boxed beef cutouts were lower as choice cutouts decreased 0.55 to 315.56 and select decreased 1.03 to 287.33. The choice/ select spread widened and is at 28.33 and the load count was 64.
Monday’s estimated slaughter is 122,000, which is above last week’s 119,000 and below last year’s 123,000.
The USDA report LM_Ct131 states: So far for Monday in all trading regions negotiated cash trade has been at a standstill. The latest established market in all regions was last week. In the Texas Panhandle Live FOB purchases traded from 178.00-179.00. In Kansas Live FOB purchases traded at 179.00. In Nebraska Live FOB purchases traded from 185.00-188.00 and dressed Delivered purchases traded from 294.00-295.00, with a few up to 298.00. In the Western Cornbelt Live FOB purchases traded from 186.00-188.00 and dressed Delivered purchases traded from 290.00-295.00.
The USDA is indicating no cash trades for live cattle and on a dressed basis (so far).
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays (except holiday weeks) and our next webinar will be on Thursday, August 24, 2023, 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
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
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