October Lean Hogs opened higher, ticked to the high of the day at 80.025 and then broke down to the low at 78.475, consolidating near the low the rest of the session to settle at 78.80. From a technical viewpoint, futures blipped above resistance at 79.80 and then broke down below support at 78.80 to settle right on the support level. The low actually took it one step further, dipping below the rising 21-DMA now at 78.60 before the combination of the support levels stopped the selling pressure. The 21-DMA will be higher on Tuesday so support must hold in my opinion or we could fall back and test the 77.80 support level. Erratic cash markets putting pressure on futures as they move a little higher and then come back to earth. Cutouts weakened for the afternoon report after providing some hope for bulls by increasing on the morning report. This will continue to pressure the cutout index and the cash index. The Lean Hog Index is expected to be lower on Tuesday. Slaughter is up on Monday and is expected to remain so for the rest of the week. With weights at high levels production should rise and prices could continue to be pressured going forward. We need to see solid export sales and good consumer demand to counter the high production. We’ll see!… If price breaks down from the low, it could test support at 77.80 and then move towards support at 76.175. If price holds settlement, we could test resistance at 79.80. Resistance then comes in at 80.45 and then the declining 50-DMA, now at 80.775.
The Pork Cutout Index ticked higher and is at 96.41 as of 09/06/2024.
The Lean Hog Index ticked lower and is at 86.24 as of 09/05/2024.
Estimated Slaughter for Monday is 486,000, which is above last week’s 2,000 and last year’s 465,519.
October Feeder Cattle opened higher, traded both sides of unchanged and then broke down to a new low for the down move on the continuous chart at 229.575. This took price to just below support at 229.825 and with the Feeder index well above the futures(The index to start the day was at 242.18), a short-covering snapback took price higher. It surged, making the high at 235.575 and then dipping into the close to settle at 234.725. The futures price is still well below the index with the index rising almost 2 handles to 243.92. This could support futures on the open. The rally stalled just below the Friday high and resistance at 235.95. Feeders has strong resistance in this area as the short-term moving averages(8 & 13) are declining and just above the 235.95 resistance level. If price can’t hold settlement, we could test support at 233.10. Support then comes in at 231.175. If price gets above resistance, we could test resistance at 237.25. Resistance then comes in at the flattening 21-DMA now at 237.725 and then 238.35.
The Feeder Cattle Index increased and is at 243.92 as of 09/06/2024.
October Live Cattle opened higher, traded both sides of unchanged and then broke down hard to the session low at 173.775. This took price through support at 174.425 and just a couple ticks above the August 21st low at 173.725. Unable to press price further, the market turned North and surged the rest of the session to the high at 177.575. It dipped at the close and settled at 176.925. The stalling just above the August 21st low puts in a potentially bullish doble-bottom candlestick formation. A close above the August 28th high at 180.175 could give us a measured move rally to just above 186.50. Don’t let this lead you to blindly buy the market just yet, however as there are a lot of pitfalls in the way. The rally stalled just above resistance at the declining 13-DMA now at 177.35 and below the declining 8-DMA at 177.90. It has longer term moving average resistance just above the 8-DMA. Packers still are in control of the cash market as the 5-area cash average price dropped another two handles last week. Cutouts are declining, with Monday’s afternoon report dropping a buck off the morning report. Packers have a lot of commitments from producers as they bought a lot of cattle with time over the past few weeks. If cutouts don’t bounce packers could really squeeze the cash market. This could keep the pressure on futures. We’ll see!… If price can’t hold settlement, it could re-test support at 175.95. Support then comes in at 174.425. A rally past the high could see price test resistance at 178.10. Resistance then comes in 179.40.
Boxed beef cutouts were mixed as choice cutouts decreased 0.89 to 308.52 and select jumped 2.37 to 298.49. The choice/ select spread narrowed and is at 10.03 and the load count was 141.
Monday’s estimated slaughter is 114,000, which is above last week’s 2,000 and below last year’s 123,407.
The USDA report LM_Ct131 states: Thus far of Monday in the Southern Plains and Nebraska negotiated cash trade has been at a standstill. In the Western Cornbelt Negotiated cash trade has been mostly inactive on light demand. Last week in the Texas Panhandle week live FOB purchases traded from 180.00-181.00. Last week in Kansas week live FOB purchases traded at 181.00. Last week in Nebraska live FOB purchases traded from 180.00-181.00, while dressed delivered purchases traded at 288.00. Last in the Western Cornbelt week live FOB purchases traded from 180.00-183.00, while dressed delivered purchases traded from 286.00-288.00.
The USDA is indicating no cash trades for live cattle and on a dressed basis (so far).
For those interested I hold a weekly 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
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
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