For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, January 28, 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.
April Lean Hogs opened higher and turned lower to the session low at 86.75. The breakdown to the low tested the key level at 87.10. Price was able to stand its ground as the cattle markets were off to the races, lending some support to the hogs. Hogs rebounded and traded to the high at 88.45. The run higher tested resistance at 88.325, and the market pulled back a touch and then settled at 88.20. Our exports have been fairly good in my opinion with a strong US Dollar and now we are seeing a pullback in the Dollar which could help exports going forward if the decline continues. The now erratic Dollar has to stabilize however, as a constantly moving currency can hinder business, in my opinion. Slaughter numbers were lower this week and could start a trend where the current week numbers stay below last year. With the cash market continuing higher and the cutout basically staying in place, it could indicate the numbers aren’t there for the packer. The packer doesn’t pay anymore that it has too in my opinion. Since he is willing to pay to get numbers needed and the slaughter is down, we could have lower numbers than expected. We also have a surging cattle market and Hogs may get swept up and follow cattle higher if cattle continues’ its surge. Easter is coming late this year and this could help Hogs move higher as the retailer loads up on hams. The President’s negotiators are also pressing China to honor its commitments from the last treaty that the last president didn’t enforce. If China complies and buys more pork this could be bullish for the hog Market. We’ll see!… A breakdown from settlement could see price test support at 87.10 and then January 10th low at 86.00. If settlement holds price could revisit resistance at 88.325. A breakout above resistance could see price re-test resistance at 90.40, which is where the April contract started as the lead contact with the high that day at 90.50.
The Pork Cutout Index increased and is 91.12 as of 01/23/2025.
The Lean Hog Index increased and is at 81.93 as of 01/22/2025.
Estimated Slaughter for Friday is 485,000, which is even with last week and above last year’s 476,178. Saturday slaughter is expected to be 186,000, which is below last week’s 213,000 and last year’s 282,363. The estimated total for the week(so far) is 1,477,000, which is below last week’s 2,627,000 and last year’s 2,688,319.
March Feeder Cattle opened higher and turned lower, trading down to the low at 273.725. It reversed course on positive Live Cattle cash news and marched back into uncharted territory, making another new all-time high for the lead contract at 277.25. Price dipped into the close and settled at 276.575. In my opinion, today’s action was all about the fat cash market as the packer panicked and paid up for cattle, bring cattle prices to new all-time highs. This sparked enthusiasm for Feeders and also probably caused hedged futures shorts to liquidate positions. The Feeder index been waffling back and forth around the 278.00 level, late in the week. It set a new high earlier this week (Monday) at 278.92 and has consolidated. The rally has brought futures to the index, significantly narrowing the discount it was at to the index. This was with the cattle on feed report due out after the close of trade on Friday where we usually see the market consolidate. The results are below. The rally to such lofty levels could see some profit taking at some point which in my opinion would be healthy for the bull market but we just don’t know when the longs will decide to take some off the table. We’ll see!… With the lead contract at all-time highs, pivots are where we will highlight resistance. If price holds settlement, it could test resistance at the daily R1 at 278.04, R2 is at 279.40 and R3 at 281.56. A breakdown from settlement could see a test of Thursday’s high at 274.65. Support then comes in at 271.00.
The Feeder Cattle Index increased and is at 278.23 as of 01/23/2025.
April Live Cattle opened lower and made the session low at 200.40. News of aggressive packer buying of cattle sent futures flying to new heights. The rally took price to a new all-time high at 203.50 and it dipped lower into the close to settle at 203.025. My producers were telling me the packer started bidding a new all-time high cash price at 208.00 and then bought 210.00. It didn’t stop there and price traded at 211.00 and then 212.00 on a live basis. Guys were telling me cash was trading at 213.00 which at the moment didn’t make to the mandatory report and they were expecting the packer to pay up even more for cattle. This is all in front of cattle on feed report which surprised the producers of the packer aggressiveness on Friday. Maybe the packer got wind of the placement number coming in under expectations of 101.1% to the reality of 97%. And they were nervous it would lead to even higher prices next so why not race price higher now to get in front of oncoming potential onslaught. It may have worked. Guys were telling me the packer bought cattle at 212.00 for this week and then offered 210.00 for cattle next week and the producers took it, fearing a pullback after the cattle on feed report. So, paying up for cattle this week may have neutralized price for next week as producers may think with the price surge to new cash market record prices, some pullback will take place next week. Right now, the 212.00 trade is an all-time high and the dressed price reached 339.00 for a new record high on that front for the mandatory report. Cutouts aren’t cooperating for the packer as he seems to be getting hit from all sides. The cutout dropped below 330.00 0n Friday putting packers in a bind and causing many to wonder what heck the packer is doing. Do they know there aren’t any cattle out there to replace the cattle sold and are struggling to keep production high to fill their orders? Are they trying to seduce producers and catch them off guard for a collapse in the market? Slaughter numbers are way down yet they continue to pay for cattle. No one knows what is going on in the collective packer mind and what they are seeing to cause them to pay up for cash up in the North. The South continues to sell their cattle at much lower prices but those that grid are seeing similar prices to the North(from what they tell me). They are even paying more at sale barns that do not go on the mandatory report. They are paying more for cattle in some locations that aren’t in the 5-area average. Can this rally continue? We’ll see!… If price can’t hold settlement, it could test support at 200.90. If settlement holds, we could see price make new highs and we could have resistance at the pivot R1 at 204.03, R2 at 205.31 and R3 comes in at 207.13.
Boxed beef cutouts were lower as choice cutouts dropped 3.04 to 327.92 and select declined 0.92 to 316.29. The choice/ select spread narrowed and is 11.63 and the load count was 129.
Friday’s estimated slaughter is 111,000, which is below last week’s 114,000 and last year’s 121,492. Saturday slaughter is expected to be 2,000, which is above last week’s 1,000 and below last year’s 5,636. The estimated total for the week(so far) is 599,000, which is below last week’s 603,000 and last year’s 614,786.
The USDA report LM_Ct131 states: So far for Friday negotiated cash trading in the Southern Plains has been mostly inactive on light demand. Not enough purchases for a market trend. In the Texas Panhandle, last week live FOB purchases traded at 201.00. The last established market in Kansas was Tuesday with live FOB purchases trading at 201.00. In Nebraska and Western Cornbelt negotiated cash trading has been active with very good demand. In Nebraska, compared to last week, live FOB purchases traded 7.00 higher from 210.00-212.00 and dressed delivered purchases traded 6.00-8.00 higher from 328.00- 330.00, with a few up to 339.00. In the Western Cornbelt, compared to last week, live FOB purchases traded 6.00-7.00 higher from 210.00-212.00 and dressed delivered purchases traded 8.00-10.00 higher, mostly at 330.00, with a few up to 338.00.
The USDA is indicating cash trades for live cattle from 201.00 – 212.00 and from 320.00 – 339.00 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 11.8 million head on January 1, 2025. The inventory was 1 percent below January 1, 2024. The inventory included 7.25 million steers and steer calves, up 1 percent from the previous year. This group accounted for 61 percent of the total inventory. Heifers and heifer calves accounted for 4.58 million head, down 3 percent from 2024.
Placements in feedlots during December totaled 1.64 million head, 3 percent below 2023. Net placements were 1.58 million head. During December, placements of cattle and calves weighing less than 600 pounds were 395,000 head, 600-699 pounds were 380,000 head, 700-799 pounds were 375,000 head, 800-899 pounds were 287,000 head, 900-999 pounds were 115,000 head, and 1,000 pounds and greater were 90,000 head.
Marketings of fed cattle during December totaled 1.74 million head, 1 percent above 2023.
Other disappearance totaled 59,000 head during December, 2 percent below 2023.
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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