Hogs and Cattle Eke Out Small gains

Ben DiCostanzoGeneral Commentary Leave a Comment

June Lean Hogs opened unchanged and ticked down to the low of the day at 97.60. It reversed and raced to the high at 99.80. The rally was over by around 9:15 CT and price gave back most of the rally by the end of the session to settle at 98.375. The rally approached resistance at 100.075 and the pullback saw price settle below the key level at 98.475. The result was continued consolidation in the lower end of the recent trading range. The trading range high is at 100.55 and the low is at 97.225. A break out above or below this range could lead to the next directional move in hogs. Cash prices are stabilizing as we move into the spring buying season. Cutouts look like it is ready to resume its upward move. Slaughter levels were above last year for this week but is expected to move lower than last year in the coming weeks. This could help solidify cash and cutouts into the meat of spring buying season. We’ll see!… If price can recover and get above 98.475, we could revisit the Friday high and test resistance at 100.075. A failure from settlement could send price down to test support at 97.30 and the low of the consolidation band. Support then comes in at 95.30.

The Pork Cutout Index ticked higher and is at 98.48 as of 05/09/2024.

The Lean Hog Index was unchanged and is at 91.28 as of 05/08/2024.

Estimated Slaughter for Friday is 473,000, which is above last week’s 462,000 and last year’s 456,080. Saturday slaughter is expected to be 9,000, which is below last week’s 26,000 and last year’s 56,803. The estimated total for the week (so far) is 2,390,000, which is below last week’s 2,407,000 and above last year’s 2,361,531.

August Feeder Cattle opened higher, rallied to the high of the day at 252.35 and then broke down to the session low at 249.05. This is a new low for the down move. Price bounced off the low and settled at 250.90. The opening run higher saw price trade above resistance at 251.50 (the 21-DMA which is rising was also at 251.50) and then stop right at resistance at 252.35. The breakdown took price below support at the 50-DMA now at 250.55, stalling just above support at 248.85. It settled at 250.90, just above the 50-DMA. The price action formed a spinning top candlestick, which indicates indecision. If price can hold settlement and take out the Friday high it could test resistance at the declining 8-DMA now at 253.025. Resistance then comes in at 254.30. If futures fail below the 50-DMA, we could re-test support at 248.85. Support then comes in at 245.75.

The Feeder Cattle Index increased and is at 240.61 as of 05/09/2024.

June Live Cattle opened higher, traded to the high of the day at 177.275 and then broke down to the low at 175.175. It recovered, approached the high and then faltered into the close to settle at 176.15. Futures continue to be over whelmed by BIAV news that have affected dairy cows and not beef cattle. Why they are so fearful of BIAV when packers are paying up for cattle with futures prices depressed is beyond me. There is a report that the virus infects the mammary glands of the infected cows and not the meat or respiratory system. They said the infections were with older cows. Has that changed? Beef cattle don’t get old. The meat was tested and found to be free of the virus. I think it is time to move away from worries about BIAV simply because it hasn’t stopped consumers from eating chicken, turkey and eggs when the bird flu makes its way through the poultry industry. Don’t we have a system in place that would remove infected meat from the food supply. Are they trying to create another pandemic situation? Packers have been purchasing cattle at steady prices which puts futures deep in the hole with cash. They are supposedly buying up cattle so they can catch producers with their pants down as we near June. If they get control of good supplies of cattle now, they could knock cattle prices down next month. But what if cattle supplies are shrinking? The packer insistence and the cheap corn prices have succeeded in producing heavier cattle thus helping packers keep production levels at reasonable levels with the lower slaughter levels. Packers are paying for heavier cattle. If they weren’t producers wouldn’t keep cattle in the feedlot over 150 days. It is a win-win for packers and producers at these heavier weights. Why are traders so worried about BIAV? Packers don’t seem to be. Get over it! The breakdown took price below support at 175.95. It settled above it, forming a spinning top candlestick. If price can hold settlement, it could test the Friday high. Resistance Then comes in at 178.10. If price falls below 175.95, it could revisit the Friday low. Support then comes in at 174.475.

Boxed beef cutouts were lower as choice cutouts decreased 0.82 to 294.57 and select decreased 1.59 to 284.17. The choice/ select spread widened and is at 10.40 and the load count was 155.

Friday’s estimated slaughter is 120,000, which is above last week’s 119,000 and below last year’s 123,972. Saturday slaughter is expected to be 13,000, which is below last week’s 23,000 and last year’s 14,978. The estimated slaughter for the week is 622,000, which is even with last week and below last year’s 644,313.

The USDA report LM_Ct131 states: So far for Friday in the Texas Panhandle negotiated cash trading has been inactive on very light demand. Not enough purchases for a market trend. The last reported market was on Thursday with live FOB purchases at 184.00. In Kansas, Nebraska and Western Cornbelt negotiated cash trading and demand have been moderate. In Kansas, compared to the last reported market on Thursday, live FOB purchases traded unevenly steady from 183.00-185.00, with a few up to 187.00. In Nebraska, compared to last week, live FOB purchases traded steady to 1.00 lower from 186.00- 187.00, and dressed delivered purchases traded 1.00 higher from 295.00-296.00. In the Western Cornbelt, compared to the last reported market on Thursday, live FOB purchases traded mostly 0.50 higher at 187.00, with a few up to 188.00, and dressed delivered purchases traded steady at 295.00, with a few up to 296.00.

The USDA is indicating cash trades for live cattle from 183.00 – 188.00 and from 294.00 – 296.00 on a dressed basis (so far).

For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, May 14, 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.

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**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

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