For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, January 07, 2024, 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.
February Lean Hogs opened lower and traded to another new low for the down move at 79.50. The breakdown negated the Tweezer Bottom established over the past two sessions and pushed pass support at 79.80. However, the breakdown stalled and price reversed course once again as the morning cutout continues to show strength, leading to a short-covering rally off the low. The rally took price past resistance at 80.45 and the 100-DMA now at 80.50 to the high at 81.50. The rally stopped just shy of resistance at 81.70 and a pullback saw price settle at 80.775. Hogs have established a Head and Shoulders Top formation with a measured move objective down to 75.75. However, the price action formed a Doji candlestick, indicating indecision in the market. We now have three small bodied candles in a row as the selloff in Hogs has stretched over 9 handles since making the high at 89.60 on November 27th. Traders continue to attempt to find a bottom as the markets has made its recent lows. Exports remain weak as year-end buying has dried up and the cash market and cutout market has faltered despite stronger morning numbers. Demand has been good domestically however, as the load counts have been strong, and the cash breakdown has been steady but slow. The upcoming seasonal should expect a stabilization in prices and could stall the Hog breakdown and if price can move above the recent high of the small-bodied candles (82.00) a larger recovery could ensue. We’ll see!… If price can’t hold settlement, it could re-test support at 79.80. Support then comes in at 78.80. If price can hold settlement, it could revisit resistance at 81.70. The December 31st high is next and then the declining 8-DMA now at 82.75.
The Pork Cutout Index decreased and is at 93.19 as of 01/02/2024.
The Lean Hog Index decreased and is at 83.99 as of 12/31/2024.
Estimated Slaughter for Friday is 488,000, which is above last week’s 487,000 and last year’s 486,868. Saturday slaughter is expected to be 419,000, which is above last week’s 413,000 and below last year’s 435,497. The estimated total for the week (so far) is 2,288,000, which is above last week’s 2,051,000 and below last year’s 2,368,755.
March Feeder Cattle continued its impressive march higher, opening higher and then proceeding to establish another new all-time high for the lead contract at 267.75. The rally stalled and price broke down, gathering steam and trading down to the low at 263.25. A late bounce saw price settle at 264.175. Excitement continued to build as traders anticipate continued strength in feeder prices, but with the weekend coming up fast, it looks like some profit taking took place after making the high. The index supported the recent bullish behavior surging to a new all-time high as reported by the CME after the close at 265.76. We’ll see!… If price holds settlement, it could test resistance at the all-time high. A breakdown from settlement could see a test of support at 262.075.
The Feeder Cattle Index surged and is at 265.76 as of 01/02/2025.
February Live Cattle continued its “rockin and rollin” start to the year, gap opening higher and closing the gap before surging to an all-time high for the lead contract at 196.20. The exuberance stalled however, even with cash prices surging to start the year with a 200.00 trade up North. Profit -taking took place as traders let some go after being unable to sustain the rally. Once again it seems that traders that failed to sell the all-time high panicked and price crashed, taking price to a new low for the session at 193.40. It settled near the low at 194.05. The rally and ensuing breakdown saw a Shooting Star Candlestick pattern develop and with the price action at new highs and a strong bullish candle the day before, could signal a major top potentially forming. It will likely take a strong follow-through to the downside on Monday to finish the bearish pattern. This could be difficult with cash prices making a new all-time high at 201.00 after the close. The cash market has been impressive with the packer unable to create fear in the producer by delaying cattle purchases as long as possible. Packers were helped today by a strong cutout with a good load count as consumer demand remains robust and retailers must be aggressive in refilling their coolers after a successful holiday season. The seasonality should be for continued strength in futures so the Monday open could be interesting. Exports have been slow, so it has been consumer demand that has been impressive in my opinion. 2025 is here and the price action going forward will be an interesting spectacle. We’ll see!… If price can’t hold settlement, it could test support at 192.05. If settlement holds, we could see price consolidate within Friday’s range.
Boxed beef cutouts were higher as choice cutouts increased 1.76 to 325.24 and select jumped 2.49 to 296.72. The choice/ select spread narrowed and is 28.52 and the load count was 149.
Friday’s estimated slaughter is 121,000, which is below last week’s 123,000 and last year’s 124,381. Saturday slaughter is expected to be 27,000, which is below last week’s 36,000 and last year’s 44,847. The estimated total for the week(so far) is 498,000, which is above last week’s 434,000 and below last year’s 542,462.
The USDA report LM_Ct131 states: So far for Friday, negotiated cash trading in the Southern Plains has been light on good demand. Compared to last week in the Texas Panhandle, live FOB purchases traded 4.00-5.00 higher at 197.00. In Kansas, compared to the last reported market on Thursday, a light test of live FOB purchases traded 1.00 higher at 197.00. In Nebraska negotiated cash trading has been active on very good demand. Compared to last week, Live FOB purchases traded 3.00-4.00 higher at 200.00 and dressed delivered purchases traded 8.00 higher at 315.00. In the Western Cornbelt, negotiated cash trading has been moderate on very good demand. Compared to last week, live FOB purchases traded 3.00-5.00 higher at 200.00 and dressed delivered purchases trading 8.00 higher at 315.00.
The USDA is indicating cash trades for live cattle from 192.00 – 201.00 and from 309.00 – 320.00 on a dressed basis (so far).
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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