October Lean Hogs took a turn for the worse on Monday, opening weak and falling down to test support at 78.80, making the low just below it at 78.725. The high was at 81.30 and it settled at 79.15. Bears are keeping the pressure on Hogs as they believe the seasonal supply increase is near and slaughter levels will dramatically increase with the cash markets have seasonally peaking, in my opinion. With the cash market breaking down as cutouts and the cash market having fallen off their highs, futures are feeling the pain. Futures are trading at a wider than normal discount to the cash index but that hasn’t prevented the breakdown. Bears seem to think hog prices will collapse as we go forward. But will it? With beef high, retailers may continue to feature pork and keep demand flowing for pork products. We’ll see! Continued selling could see price breakdown and test support at 77.80. Support then comes in at 76.175. If settlement holds, we could test resistance at 79.80 and then 80.45.
The Pork Cutout Index decreased and is at 111.93 as of 8/11/2023.
The Lean Hog Index decreased and is at 103.06 as of 8/10/2023.
Estimated Slaughter for Monday is 461,515, which is above last week’s 411,000 and last year’s 444,000.
September Feeder Cattle displayed some weakness, as the fat market struggled. The high was at 252.175 and the low was at 249.675. Settlement was at 250.125. Feeder Cattle is in a trading range with the high at 254.30 and the low at 247.625. It is trading in the lower end of the range. A breakdown from the low could see price test support at 248.85. Pushing past support could see the low challenged. If settlement holds, resistance could be tested at 251.30. Resistance then comes in at 252.175.
The Feeder Cattle Index increased and is at 244.81 as of 8/11/2023.
October Live Cattle broke down below support as weaker than expected cash prices for last week pressured cattle. Trade was quiet as once again cash is expected to be delayed until the end of the week. The high was at 181.75 and the low came in at 180.50. Settlement was near the low at 180.675. Settlement was below support and puts pressure on futures. A breakdown below the low could see price test support at 179.40. Support then comes in at 178.10. If settlement holds, price could test resistance at 181.175. Resistance then comes in at 182.575.
Boxed beef cutouts were higher as choice cutouts jumped 2.89 to 305.50 and select surged 3.22 to 280.45. The choice/ select spread narrowed and is at 25.05 and the load count was 96.
Monday’s estimated slaughter is 119,000, which is below last week’s 123,000 and last year’s 121000.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading has been at a standstill in all regions. For last week in the Southern Plains live Fob purchases traded at 180.00. The latest established market was last week in Western Cornbelt and Nebraska live FOB purchases traded at 188.00 and dressed delivered purchases traded at 295.00.
The USDA is indicating no cash trades for live cattle and on a dressed basis (so far).
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays (except holiday weeks) and our next webinar will be on Thursday, August 17, 2023, 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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