October Lean Hogs made a new high for the recent up move, opening lower, making the session low at 81.925 and then rallying to the session high at 83.00. It pulled back from the high and settled at 82.225. The rally stopped just below resistance at 83.325 and the low was just above support at 81.70. Cash prices remain under pressure as hog and pork supplies have been seasonally large. Demand for pork has been better than expected and has kept prices from plunging despite the large supply of pork but they are moving lower. Futures have held up well with the lower prices which is giving hope to producers that cash prices could turn around and go higher. The futures market however, put in a potentially bearish candlestick as it formed a Shooting Star at the high of the up move. A breakdown on Tuesday could create selling pressure in hogs and send prices to lower support levels. If price breaks down from settlement, we could pullback and test support at 81.70 and then the declining 50-DMA now at 81.45. Support then comes in at the rising 8-DMA now at 80.625, 80.45 and then 79.80. If price takes out the Friday high, we could test resistance at 83.325. Resistance then comes in at 85.325 and then the rising 200-DMA now at 85.45.
The Pork Cutout Index ticked lower and is at 96.30 as of 08/29/2024.
The Lean Hog Index decreased and is at 87.04 as of 08/28/2024.
Estimated Slaughter for Friday is 476,000, which is below last week’s 479,000 and above last year’s 465,683. Saturday slaughter is expected to be 38,399, which is below last week’s 96,000 and above last year’s 21,952. The estimated total for the week (so far) is 2,430,300, which is below last week’s 2,503,000 and above last year’s 2,386,831.
October Feeder Cattle opened lower, traded down to the session low at 236.275 and then rallied to the high of the day at 238.80. It pulled back into the close and settled at 237.75. The trade down to the low tested support at the rising 8-DMA 236.425 and then the rally took price past resistance at 238.35 with the pullback and settlement taking price below the declining 13-DMA now at 237.85. If price can’t hold settlement, we could re-test support at the 8-DMA. Support then comes in at 235.95 and then 234.475. If it moves above the 13-DMA we could see a test of the Friday high. Resistance then comes in at the declining 21-DMA now at 239.10.
The Feeder Cattle Index increased and is at 242.95 as of 08/29/2024.
October Live Cattle opened higher and traded down to the low at 177.75. The breakdown took price below support at 178.10 and the declining 13-DMA at 177.925. It recovered off the low and rallied to the high at 179.625. The rally took price just past resistance at 179.40 and it couldn’t sustain success and pulled back to settle at 178.60. Settlement was below the flat 200-DMA now at 178.975, keeping pressure on bulls. The cash market was lower on the week as the average price continues to work lower as the North continues to fall back towards the south’s price level. Packers have successfully broken the market and taken away the premium the North was getting for its cattle. It looks like bringing cattle from Kansas to Nebraska was the straw that broke the camel’s back. Beef demand remains strong, but cutouts have seasonally started to work lower as buying for the Labor Day holiday is complete. Packers have been able to use this to further push back on cash prices, in my opinion. If price can’t hold settlement, it could re-test support at 178.10 and then the 13-DMA. Support then comes in at the rising 8-DMA now at 177.20. A rally past the 200-DMA could see price re-test resistance at 179.40. Resistance then comes in at the 100-DMA now at 180.075.
Boxed beef cutouts were mixed as choice cutouts increased 0.68 to 309.34 and select dipped 0.37 to 295.82. The choice/ select spread widened and is at 13.52 and the load count was 98.
Friday’s estimated slaughter is 120,000, which is above last week’s 113,000 and below last year’s 121,948. Saturday slaughter is expected to be 14,000, which is above last week’s 11,000 and last year’s 9,282. The estimated total for the week (so far) is 611,000, which is above last week’s 608,000 and below last year’s 630,514.
The USDA report LM_Ct131 states: So far for Friday in the Southern Plains negotiated cash trading has been inactive on very light demand. Not enough purchases for a market trend. Thursday was the last reported market in the Southern Plains. In the Texas Panhandle live FOB purchases traded at 183.00. In Kansas live FOB purchases traded from182.00-183.00. In Nebraska and Western Cornbelt negotiated cash trading has been limited on light demand. Not enough purchases for a market trend in these regions. In Nebraska Thursday was the last reported market with live FOB purchases mostly at 184.00 and dressed delivered purchases from 288.00-292.00. In the Western Cornbelt Thursday was the last reported live FOB market from 183.00-185.00. Last week dressed delivered purchases traded from 293.00-295.00.
The USDA is indicating cash trades for live cattle from 181.00 – 185.50 and from 288.00 – 293.00 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 03, 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
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