July Lean Hogs opened lower, below support at 92.375 and fell apart. It broke down to support at 90.40 making the low right on support. Bulls came back into the market and hogs surged. It reached its high late morning at 94.325 and then consolidated the rest of the session, settling at 93.65. The breakdown to support was all about declining fundamentals as the cash market has faltered creating pessimism for futures traders. And then just like that the pessimism faded and the rally came in full force as the morning cutouts rebounded and traders felt some relief. The rally, however, took price past resistance at 93.50, but stalled at moving average resistance from the 13 and 100-DMAs. The 13 is in decline and stands at 94.175 and the 100 is going in the opposite direction and is at 94.225. The recovery in price did take hogs back into the upper end of its recent trading range where the market has continued to stall. The breakdown and rally extended the consolidation range. The high of the range is at 94.75 and Friday’s low is the low of the range. Slaughter numbers continue to be higher than expected and weights have been going up along with reports that retailers haven’t been featuring pork like before, keeping price relatively high to balance out their beef prices. This has caused consumer demand to falter and is keeping cash in a tight range that it hasn’t been able to get away from, in my opinion. A failure from settlement could see price revisit support at 92.375 and a breakdown from there could send price down to test support at 90.40. If price can hold settlement, it could test resistance at 95.30. Resistance then comes in at 97.30.
The Pork Cutout Index decreased and is at 100.33 as of 06/13/2024.
The Lean Hog Index increased and is at 91.58 as of 06/12/2024.
Estimated Slaughter for Friday is 456,000, which is below last week’s 466,000 and above last year’s 454,022. Saturday slaughter is expected to be 49,000, which is above last week’s 40,000 and last year’s 22,304.The estimated total for the week (so far) is 2,390,000, which is below last week’s 2,422,000 and above last year’s 2,325,985.
August Feeder Cattle gap opened higher, closed part of the gap at the session low at 258.50 (the gap is from the Friday low to the Thursday high at 258.30) and then surged. The rally lasted till late morning with the high at 262.65 and then some consolidation near the high with the August contract settling at 261.975. The rally took price past resistance at 257.925, 261.05 and 262.075. The pullback at the end of the session saw price settle in between the two upper resistance levels. This was a nice breakout after trading down to support on Thursday at 254.30, but at the same time disappointing in that we even challenged support on Thursday and couldn’t race to challenge the all-time high at 264.95 ( for the lead contract) made on May29th when the index was trading below 250.00. The Feeder index this week made new all-time highs 3 days in a row with the latest new high at 256.13. I anticipate the index to continue higher as cattle numbers are lacking and it looks like feedlots need to be aggressive to buy cattle. With numbers outside of feedlots lacking, what will happen to price when and if producers start retaining heifers to rebuild herds. The competition for cattle could push the index to extreme levels, in my opinion. A failure from support at 261.05 could see price test support at the June 11th high at 260.00. Support then comes in at the rising 21-DMA now at 258.425 and then the gap. If price takes out the Friday high, it could test resistance at the aal-time high at 264.95.
The Feeder Cattle Index increased and is at 256.13 as of 06/13/2024.
August Live Cattle gap opened higher and down ticked to the low at 180.35. This formed the gap from the Thursday high at 179.675 to the Friday low. The market surged to the high by late morning at 183.60 where it stalled, and price drifted into the close to settle at 183.175. There is excitement in most of cattle country as packers were extremely aggressive in procuring cattle as most major regions saw impressive leaps in price. The Friday range for live prices saw steers trade from 192.00 – 198.00 and heifers from 190.00 – 197.00. This occurred in the North with Texas at a standstill. But Kansas also joined the party as my sources told me that cattle were trading as high as 196.00 on a live basis. Okay Texas it’s your turn. The Texas trade is holding back the futures price and the cash average. Futures seem to be priced to the lowest hanging fruit and right now it looks like that is Texas. The cash average this week looks like it is going to establish a new all-time high price with the Texas price limiting the advance. Take a look at what is occurring outside your region and take price to the next level. It is my belief cattle numbers aren’t there and packers remain eager to purchase cattle at any price at any weight. This is at a time(seasonal) in years past with cattle numbers growing ever larger and the packer could sit back and wait for the producer to give in and sell cattle at the low packer bids, not wanting to add weight to the cattle they were growing. With the supply so large, the packer would pull back and say I was here but now I’m lower because I have enough cattle. But I will take them at this price. I heard this from my customers all the time. Now, it looks like the circumstances have been reversed and packers are telling the producer I will buy at your price but let’s feed them a little longer and put more weight on them. “The 1,450 pounds is too light.” Yes, I was told this by customers, and they complied with the request because they can feed them cheaply, and the packer wasn’t going to dock them. There were stories going around that with the tight numbers in Nebraska the packer could take cattle bought in Kansas and take them to plants in Nebraska. Kansa seemed to get this and were able to get better prices. Go Kansas go… It’s your turn Texas… If price can hold settlement, it could test resistance at 184.35. Resistance then comes in at 185.75. If price can’t hold settlement, it could test support at 182.575. Support then comes in at 181.175.
Boxed beef cutouts were higher as choice cutouts increased 1.58 to 319.89 and select surged 4.56 to 303.81. The choice/ select spread narrowed and is at 16.08 and the load count was 101.
Friday’s estimated slaughter is 119,000, which is above last week’s 118,000 and last year’s 117,811. Saturday slaughter is expected to be 7,000, which is even with last week and below last year’s 15,732. The estimated slaughter for the week (so far) is 615,000, which is above last week’s 614,000 and below last year’s 636,124.
The USDA report LM_Ct131 states: Thus far for Friday in the Texas Panhandle negotiated cash trade has been at a standstill. The most recent market in the Texas Panhandle was Thursday with live FOB purchases at 186.00. In Kansas, Nebraska and the Western Cornbelt negotiated cash trade has been slow on moderate demand. On Thursday in Kansas live FOB purchases traded at 186.00, with a few up to 195.00. On Thursday in Nebraska live FOB purchases traded from 195.00-196.00, with a few up to 197.00, while dressed delivered purchases traded from 305.00-306.00, with a few up to 308.00. There have been a few dressed FOB purchases at 310.00. On Thursday in the Western Cornbelt live FOB purchases traded from live FOB purchases traded 2 from 193.00-195.00, with a few up to 197.00, while dressed delivered purchases traded from 305.00-306.00, with a few up to 309.00.
The USDA is indicating cash trades for live cattle from 184.00 – 198.00 and from 301.00 – 308.00 on a dressed basis (so far).
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, June 18, 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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