For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, November 05, 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 opened higher and traded to another new high for the up move at 85.075. The rally failed and broke down to the session low at 83.875. It consolidated and settled near the low at 84.075. The excitement in Hogs continues to build as the cash market has strengthened on a combination of solid demand and lower than expected supply, in my opinion. Exports once again surged on the Thursday report, showing sales of 44,800 MT. Mexico and China led the way with large purchases of 17,700 MT and 10,400 MT respectively. Consumer demand has also been stable and the in my opinion the cutout rally has been led by strong demand for the belly as belly stocks have been on the low end. The one-day cutout (Friday’s) ended the week at its highest level in week’s (103.97), led by strong gains in the belly. This should lead to a higher cutout index to start next week. The futures rally however, is starting to look overbought and Friday’s rally and down turn created a Shooting Star candlestick formation which, could be viewed as a bearish formation. Monday’s trade could give confirmation to the formation. This is the second day in a row with a strong start and a weak finish. To me, this indicates bulls may be getting antsy and will panic the moment we see a reversal of fortune in the cash markets, if not before. If price breaks down from settlement, it could test support at 83.325. Support then comes in at 81.70. If price can hold settlement, it could test resistance at 85.325. Resistance then comes in at 87.10 and the nearby rising 200-DMA now at 87.225.
The Pork Cutout Index increased and is at 101.46 as of 10/31/2024.
The Lean Hog Index increased and is at 87.93 as of 10/30/2024.
Estimated Slaughter for Friday is 484,000, which is below last week’s 485,000 and above last year’s 481,983. Saturday slaughter is expected to be 219,000, which is above last week’s 156,000 and below last year’s 258,551. The estimated total for the week (so far) is 2,653,000, which is above last week’s 2,593,000 and below last year’s 2,665,081.
January Feeder Cattle opened lower and made an attempt to rally off the lower open that failed. It crashed, trading down to the low at 239.50. The breakdown stalled as the futures price reached an extreme discount (in my opinion) to the index and traders snapped price back towards the index. Price surged, taking out the early high and racing to the session high at 243.90. Price pulled back from here and consolidated into the close to settle near the high at 243.20. The rally stalled just below resistance at the declining 8-DMA now at 244.10 while the breakdown took price below support at 240.875 and the Thursday low at 239.875. The resulting price action formed a Bullish Engulfing candlestick formation and now we 2 engulfing formations in play. One a Bearish Engulfing candle formation that led to the breakdown and now the bullish formation that could see price challenge the recent high?? If price holds settlement, it could re-test resistance at the 8-DMA and then the nearby declining 13-DMA now at 244.525. Resistance then comes in at 245.75. A breakdown from settlement could see a test of support at the rising 50-DMA now at 242.875 and then 242.475. Support then comes in at the rising 240.875.
The Feeder Cattle Index decreased and is at 250.98 as of 10/31/2024.
December Live Cattle opened lower, made the high at 186.60 and then broke down to the session low at 184.45. It bounced off the low and couldn’t quite make it to the high, settling back and drifting into the close to settle near the high at 185.925. It created a long shadow and a small bodied candlestick which could give bulls hope for a rally if it can open strong on Monday. The rally took price to just above the Thursday open, while the breakdown saw price stop just above support at 184.35. Cutouts ended the week on weakness and the cash trade is likely to be a little lower than last week’s average price. The resulting weakness in cutouts and a basically steady cash market caused the packer to pull back on slaughter. Slaughter was expected to be steady to a little higher than last week because it is believed the packer is in the black but the lower cutouts put a dent in those plans, in my opinion. We could see some more weakness in the cutout during November as retailers get ready for the Thanksgiving holiday which usually features turkey and ham in the celebrations. A weakening cutout could lead to a pullback in cash which will likely keep the futures market on the defensive. Especially since we are near all-time highs in my opinion. If price can’t hold settlement, it could re-test support at 185.75. Support then comes in at 184.35. If settlement holds, we could see price test resistance at the 13 and 21-DMAs, with both at 187.45. Resistance then comes in at 187.725. Trendline resistance then comes in at 187.875.
Boxed beef cutouts were lower as choice cutouts decreased 1.26 to 316.34 and select decreased 0.34 to 285.03. The choice/ select spread narrowed and is at 31.31 and the load count was 95.
Friday’s estimated slaughter is 119,000, which is above last week’s 113,000 and below last year’s 123,078. Saturday slaughter is expected to be 6,000, which is below last week’s 19,000 and last year’s 13,028. The estimated total for the week (so far) is 615,000, which is below last week’s 623,000 and last year’s 636,337.
The USDA report LM_Ct131 states: Thus far for Friday negotiated cash trade in the Southern Plains, Nebraska and the Western Cornbelt has been inactive on very light demand. Not enough purchases in any region for a market trend. Wednesday was the last fully established live FOB purchase market in these regions at 190.00. In Nebraska and the Western Cornbelt the last reported dressed delivered purchase market was on Wednesday, with Nebraska from 296.00-298.00 and the Western Cornbelt at 298.00.
The USDA is indicating cash trades for live cattle from 187.00 – 192.00 and 296.00 – 304.00 on a dressed basis (so far).
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Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
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