October Lean Hogs opened lower, turned higher and traded to the high of the day at 81.30. The bounce took price just past resistance at the declining 50-DMA now at 80.95, stalling just below the 81.70 resistance level. The price action turned lower, and it broke down the rest of the session to the low at 79.425. The breakdown took price below support at 79.80 with settlement below it at 79.50. This keeps the pressure on bullish traders in my opinion. Cash fundamentals remain weak in my opinion as cutouts have weakened unable to sustain rallies and seemingly comfortable between 94 and 98. The cash index is below 90 and could weaken if cutouts break down below 94. Supplies should seasonally increase into the fall, and this could pressure cutout prices. It is important, in my opinion, for demand both domestically and with exports to hold up as waning demand could pressure prices even further. But you do have to be impressed with how hogs behaved on Friday in my opinion as the cattle markets were beat up with the Equities getting hammered. Hogs were lower but were more stable than the cattle markets. If price breaks down from the low, it could test support at 78.80 and then the rising 21-DMA now at 78.35. Support then comes in at 77.80. If price gets above 79.80, we could test resistance at 80.45 and then the declining 50-DMA, now at 80.95. Resistance then comes in at 81.70.
The Pork Cutout Index ticked lower and is at 96.38 as of 09/05/2024.
The Lean Hog Index ticked higher and is at 86.43 as of 09/04/2024.
Estimated Slaughter for Friday is 482,000, which is above last week’s 476,000 and last year’s 477,831. Saturday slaughter is expected to be 395,000, which is above last week’s 37,000 and last year’s 348,197. The estimated total for the week (so far) is 2,327,000, which is below last week’s 2,429,000 and above last year’s 2,245,347.
October Feeder Cattle opened lower, turned higher and rallied to the high of the day at 235.95. This took price to resistance at 235.95 and it held back the buying as the equity markets started breaking down, causing traders to ignore the strengthening Feeder Index, in my opinion. With Feeder prices still at high levels, traders pulled the plug as fears the weakening equity markets would lead to economic woes and lead for beef demand destruction. This sent prices lower, and Feeders broke down the rest of the session to the low at 230.425. It settled near the low at 230.95. The breakdown took price below support at 231.175 and is a new low for Feeders on the continuous chart. If price can’t hold settlement, we could test support at 229.825. Support then comes in at 228.05. If price gets above 231.175, we could test resistance at 233.10. Resistance then comes in at 234.475.
The Feeder Cattle Index increased and is at 242.18 as of 09/05/2024.
October Live Cattle opened lower, reversed and traded up to the session high at 177.975. The high was just above resistance at the flattening 8-DMA now at 177.90 and the key level at 178.10. Price reversed once again and traded lower the rest of the session to the low at 174.925. Settlement was at 175.175. The breakdown took price below support at 175.95and puts cattle in a tough position for next week. The cash market continues to weaken as prices are lower again with Nebraska and Iowa leading the way downward. The packer has taken back control of the pricing with the North coming all the way back and are basically even with the South. Some are expecting the North to start trading at a deficit to the South in the coming weeks. The packer moving lower priced cattle from Kansas to Nebraska for slaughter seems to have won the day. The breakdown in cash has emboldened bearish traders and they continue to pressure futures. It doesn’t help either that on a successive Employment situation report day the Equity markets tank creating demand destruction worries for beef. (Which I don’t think will happen.) Cattle prices are still near all-time highs even with this breakdown and I had read and are seeing the point that traders are using the livestock markets as a proxy for food inflation. Cattle is the last consumer market to be closer to its highs and traders are seeming trying to bring the cattle price down to earth. Grain prices, crude oil, gasoline, natural gas and heating oil are all well off their highs and some are expecting them to go lower still. Cattle has come down but are still above their previous all-time high. It is an election year so there could be some effort to try to tame inflation by knocking prices down in these areas. It’s not working too well as inflations’ influences are varied, in my opinion. If Equity prices continue to fall before the next Fed meeting cattle prices could remain under pressure. Remember… Traders want the Fed to lower rates, with some demanding a half percent to a one percent cut. So, they cry by selling the equity markets , in my opinion. I don’t think this will help cattle in the near term. If price can’t hold settlement, it could test support at 174.425. Support then comes in at 172.75. A rally past 175.95 could see price test resistance at the declining 13-DMA now at 177.225. Resistance then comes in at 178.10.
Boxed beef cutouts were lower as choice cutouts decreased 2.10 to 309.41 and select dipped 0.66 to 296.12. The choice/ select spread narrowed and is at 13.29 and the load count was 135.
Friday’s estimated slaughter is 123,000, which is above last week’s 120,000 and below last year’s 124,889. Saturday slaughter is expected to be 43,000, which is above last week’s 14,000 and below last year’s 47,443. The estimated total for the week (so far) is 542,000, which is below last week’s 611,000 and last year’s 558,921.
The USDA report LM_Ct131 states: Thus far for Friday in the Southern Plains negotiated cash has been mostly inactive on light demand. The most recent market in the Southern Plains was Thursday with live FOB purchases at 181.00. In Nebraska and the Western Cornbelt negotiated cash trade has been slow on light demand. Compared to Thursday in Nebraska live FOB purchases traded 1.00 lower at 180.00. On Thursday was the most recent dressed delivered purchases at 288.00. Compared to Thursday in the Western Cornbelt live FOB purchases mostly steady from 180.00-183.00. The most recent dressed delivered purchases were Thursday from 286.00-288.00.
The USDA is indicating cash trades for live cattle from 179.00 – 185.00 and from 286.00 – 289.00 on a dressed basis (so far).
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, September 10, 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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