October Lean Hogs opened higher and rallied to the high at 81.45. The rally stalled just below resistance at 81.70 and retreated. It made its way lower, making the low at 79.775 and the working back to the middle of the range to settle at 80.40. The down move took price back below support at 80.45 and 79.80. It formed a Doji candlestick, indicating indecision in the price action after a nice rally from the August 13 low at 71.325 to the Monday high. Cash prices continue its erratic run, with the Monday cutouts down over 4 bucks after climbing last week. Monday’s breakdown in the one-day cutout took the cutout back to last week’s low in one day. The seasonality is for supplies to increase and consumer demand to weaken but so far demand has been holding up as the supplies increase. Ther is hope the demand will keep prices from breaking down but today’s breakdown in the cutout could change some trader’s minds. If price breaks down from the Monday low, we could pullback and test support at 78.80. Support then comes in at 77.80 and 76.175. If price holds settlement, we could test resistance at 81.70. Resistance then comes in at 83.325.
The Pork Cutout Index ticked higher and is at 96.89 as of 08/23/2024.
The Lean Hog Index decreased and is at 88.22 as of 08/22/2024.
Estimated Slaughter for Monday is 484,000, which is above last week’s 483,000 and last year’s 477,386.
October Feeder Cattle gap opened lower, made the session low at 232.925 and then surged to the high of the day at 238.70. It pulled back into the close and settled at 237.475. The gap open lower could have been a brief negative response to the Cattle on Feed report, testing support at 233.10 and then catching fire and rushing past resistance levels to finally stall just above the key level at 238.35 and rising trendline resistance at 238.675. The pullback took price back to support at 237.25 with settlement just above it. The price action formed an Outside Up candlestick. If price can’t hold settlement, we could test support at 235.95. Support then comes in at 234.475 and then the Monday low. If it holds settlement, it could re-test resistance. Resistance then comes in at 240.875.
The Feeder Cattle Index increased and is at 242.83 as of 08/23/2024.
October Live Cattle Gap opened lower and made the low at 174.80. It also surged off the low, rallying to make the session high at 178.30. It pulled back and settled at 176.975. The open saw price stall just above support at 174.425 while the rally took price to just above resistance at 178.10. Settlement was just below the declining 8-DMA now at 177.05. The price action formed an Outside Up candlestick. The negative reaction to the Cattle on Feed Report was fleeting as traders looked to be in liquidation mode after last week’s breakdown in futures. Bears still have the advantage in the price action and producers are still on the run from the packers merciless crushing of the cash market. The cash average dropped another 3.60 to 185.54 and with next week a short week for slaughter, they are going to try to pressure cash prices some more. Producers are hoping futures continue to rally so they can get some mojo back and get a little more for their cattle. Settlement was above the key level at 175.95, but below the declining 8-DMA. 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 8-DMA could see price re-test resistance at 178.10. Resistance then comes in at the sliding 200-DMA now at 178.925.
Boxed beef cutouts were lower as choice cutouts decreased 1.44 to 315.90 and select dipped 0.27 to 300.19. The choice/ select spread narrowed and is at 15.71 and the load count was 115.
Monday’s estimated slaughter is 116,000, which is below last week’s 117,000 and last year’s 125,036.
The USDA report LM_Ct131 states: Thus far for Monday all trading regions negotiated cash trade has been at a standstill. Last week in Texas Panhandle live FOB purchases traded at 183.00. Last week in Kansas live FOB purchases traded from 183.00-184.00. Last week in Nebraska live FOB purchases at 184.00, while dressed delivered purchases traded from 293.00-295.00. Last week in the Western Cornbelt live FOB purchases traded from 184.00-188.00, while dressed delivered purchases traded from 293.00- 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 livestock webinar on Tuesdays and my next webinar will be Tuesday, August 27, 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
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