For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, November 12, 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.
December Lean Hogs gap opened lower and traded down to the session low at 79.80. It reversed course and surged to the high at 81.175. The rally to the high closed the gap from the open and the price action after the gap close turned lower again and broke down to close in the middle of the range at 80.425. It formed a Doji candlestick indicating indecision in the market. The weakness from the open, in my opinion, came after a weak one-day cutout on Thursday. The reversal to the high came as the morning cutout surged on a strong belly. I believe the pullback into the close was simply, traders not believing the cutout would be able to hold the strength in the belly. The one-day cutout did come down on the afternoon report as the belly did pull back but, it was able to hold most of its gains. The breakdown to the low stopped right at support at 79.80. There is also a confluence of support nearby with the rising 21-DMA at 80.05 and the declining 100-DMA at 80.025. Settlement was a tick below the key level at 80.45. The market is looking at a potential topping in the cash markets and the Doji candlestick is in my opinion traders looking for more information on the cash markets. The Lean Hog Index is expected to be lower on Monday so, with the cutout higher what will traders do? We’ll see!… Slaughter this week was mixed with it above last year’s slaughter but lower than last week. Are the seasonals coming into play? If price breaks down from settlement, it could re-test support at 79.80. Support then comes in at 78.80. If price can hold settlement, it could test resistance at 81.70.
The Pork Cutout Index decreased and is at 101.71 as of 11/07/2024.
The Lean Hog Index increased and is at 90.61 as of 11/06/2024.
Estimated Slaughter for Friday is 485,000, which is above last week’s 484,000 and last year’s 452,255. Saturday slaughter is expected to be 168,000, which is below last week’s 219,000 and last year’s 190,946. The estimated total for the week (so far) is 2,605,000, which is below last week’s 2,653,000 and above last year’s 2,578,378.
January Feeder Cattle gap opened lower at the high of the day at 243.25. It crashed from here, trading down to the low at 240.275. It settled in and consolidated the rest of the session near the low, settling at 241.425. The breakdown took price below support at 242.475 and 240.875 with settlement in between the two support levels. The breakdown couldn’t take out the November 1st low at 239.50 giving hope to bullish traders. The Feeder index has moved off its recent highs but isn’t crashing. Traders seem to believe that the has peaked and will head towards the futures going forward. We’ll see!… If price holds settlement, it could test resistance at 242.475. Resistance then comes in at the 50-DMA now at 243.475. A breakdown from settlement could see a re-test of support at 240.875. The November 1st low is next and then 238.35.
The Feeder Cattle Index down ticked and is at 249.86 as of 11/07/2024.
December Live Cattle gap opened lower, made the high at 184.825 and then broke down to the session low at 183.45. It recovered off the breakdown and traded back to the high before collapsing yet again to settle near the low at 183.70. Cash market weakness led by a breakdown in the cutout put the pressure on futures in my opinion. Since the choice peaking around 324.00, we have seen it fall around 16 handles. The packer continues to keep slaughter under wraps as it is once again below last year and they have been able to get producers to relent on prices in the cash market as a result in my opinion. We are also seeing some demand concerns as we are entering turkey season and we usually see some pressure in the cattle markets during this time. Then we get the Christmas and holiday rush into the end of the year so, some volatility is coming in my opinion. Exports were weak on the latest report as prices were strong during this period. So, in my opinion, the packer has the producer in a tough position for now. The breakdown stopped just above trendline support at 183.40 and will rise to 183.50for Monday. This could make or break the trading session on Monday. If price can’t hold the trendline, it could test support at 182.575. Support then comes in at the rising 200-DMA now at 182.05. If settlement holds, we could see price test resistance at 184.35. Resistance then comes in at the gap close at 185.275.
Boxed beef cutouts were lower as choice cutouts decreased 1.53 to 307.93 and select decreased 0.53 to 279.19. The choice/ select spread narrowed and is at 28.74 and the load count was 151.
Friday’s estimated slaughter is 116,000, which is below last week’s 119,000 and above last year’s 112,505. Saturday slaughter is expected to be 9,000, which is above last week’s 6,000 and below last year’s 12,706. The estimated total for the week (so far) is 619,000, which is above last week’s 615,000 and below last year’s 622,952.
The USDA report LM_Ct131 states: Thus far for Friday in the Southern Plains negotiated cash trade has been light on light demand. Compared to last week, a few live FOB purchases have traded 3.00 lower at 187.00. In Nebraska negotiated cash trade has been light to moderate on moderate demand. Compared to last week, a few live FOB purchases traded 2.00-4.00 lower from 186.00-188.00. Not enough dressed purchases for a market trend. Last week dressed delivered purchases traded from 296.00-298.00. In the Western Cornbelt negotiated cash trade has been light on light demand. A few live FOB purchases traded from 185.00-186.00, however, not enough purchases live or dressed purchases for a market trend. Last week live FOB purchases traded at 190.00 and dressed delivered purchases traded from 296.00-298.00.
The USDA is indicating cash trades for live cattle from 184.00 – 189.00 and 290.00 – 298.00 on a dressed basis (so far).
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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