Hogs test resistance while cattle markets consolidate in front of Reports

Ben DiCostanzoGeneral Commentary

February Lean Hogs in a quiet holiday inspired trade, opened lower and traded down to the low of the day at 70.30. It reversed and rallied to the high of the day at 71.975. It consolidated the rest of the session and settled at 71.35. Price is consolidating in the middle of its 65.40 – 74.90 range on the continuous chart as the holiday action and the nervously awaited Quarterly Hogs and Pigs report limited traders desire to move the market. Price traded to just below support at the 38.2% retracement level at 70.475 of the 78.70 high from September 20th to the 65.40 low on October 20th on the continuous chart. The rally took price past resistance at 71.85 and just below resistance at the 50% retracement level at 72.05. Settlement was just above the key level at 71.35. Volume was light and the report came out after the close on Friday. In my opinion, the report could be perceived as bearish to hogs. Hog supply should remain plentiful in the near term as the decline in breeding inventory may not be enough to offset the improvement in pigs per litter. We’ll see…. If price can hold settlement, we could retest resistance 71.85. Resistance then comes in at the nearby 50% retracement at 72.05. If futures clear the 50% retracement level, we could see a re-test of resistance at 72.80. Resistance then comes in at the 61.8% retracement level at 73.625. If futures fail to hold settlement, we could see a breakdown to re-test support at the 38.2% retracement level and then the flattening 50-DMA now at 70.00 and the nearby 69.90 support level. A failure from here could see support tested at 68.75.

The Pork Cutout Index decreased and is at 82.82 as of 12/21/2023.

The Lean Hog Index increased and is at 66.69 as of 12/20/2023.

Estimated Slaughter for Friday is 434,000, which is below last week’s 471,000 and above last year’s 106,000. Thursday’s slaughter was revised lower to 485,000. Saturday slaughter is expected to be 61,000, which is below last week’s 297,000 and above last year’s 1,000. The estimated total for the week (so far) is 2,426,000, which is below last week’s 2,682,000 and above last year’s 1,783,000.

United States Hog Inventory Up Slightly

United States inventory of all hogs and pigs on December 1, 2023 was 75.0 million head. This was up slightly from December 1, 2022, but down slightly from September 1, 2023. Breeding inventory, at 6.00 million head, was down 3 percent from last year, and down 3 percent from the previous quarter. Market hog inventory, at 69.0 million head, was up slightly from last year, but down slightly from last quarter. The September-November 2023 pig crop, at 34.6 million head, was down slightly from 2022. Sows farrowing during this period totaled 2.97 million head, down 4 percent from 2022. The sows farrowed during this quarter represented 48 percent of the breeding herd. The average pigs saved per litter was 11.66 for the September-November period, compared to 11.22 last year. United States hog producers intend to have 2.90 million sows farrow during the December 2023-February 2024 quarter, down 2 percent from the actual farrowings during the same period one year earlier, and down 1 percent from the same period two years earlier. Intended farrowings for March-May 2024, at 2.91 million sows, are down 1 percent from the same period one year earlier, and down 2 percent from the same period two years earlier. The total number of hogs under contract owned by operations with over 5,000 head, but raised by contractees, accounted for 51 percent of the total United States hog inventory, up 3 percent from the previous year.

March Feeder Cattle opened higher and traded down to the low of the day at 222.85. It recovered and traded to the session high at 225.525 and then pulled back to settle at 224.40.  The rally approached resistance at 225.675 while the early decline took price below support at 223.55, stalling just above the 8-DMA at 222.55. Feeders have formed a ledge and a breakout above the high at 226.85 could lead to a test of resistance at 228.05. Resistance then comes in at 229.825. A failure below the low of the ledge at 222.45 could see a test of support at 220.875.

The Feeder Cattle Index up ticked and is at 219.81 as of 12/21/2023. 

February Live Cattle opened higher and broke down to the low at 167.85, it recovered and rallied to the high at 169.55. It pulled back and settled at 168.525. The price action was weak in front of the Cattle on Feed report in spite of strengthening cash prices. Traders seemed nervous about the report and it seems justified as I believe it will be perceived as bearish with the on-feed number slightly above 12miilion head and above average estimates from analysts. A breakdown below the low could see price test support at 166.975. Support then comes in at 164.90. A rally past 168.625 could see a test of the Friday high. Resistance then comes in at 170.375.

Boxed beef cutouts were mixed as choice cutouts increased 1.80 to 292.93 and select dipped 0.12 to 261.15. The choice/ select spread widened and is at 31.78 and the load count was 90.

Friday’s estimated slaughter is 117,000, which is below last week’s 121,000 and above last year’s 98,000. Saturday’s slaughter is expected to be 7,000, which is below last week’s 23,000 and above last year’s 3,000. The estimated total for the week (so far) is 621,000, which is below last week’s 649,000 and above last year’s 552,000.

The USDA report LM_Ct131 states: So far for Friday in all regions negotiated cash trading has been slow on light to moderate demand. In the Southern Plains, compared to last week, live FOB purchases traded 1.00 higher at 171.00. A light test was noted. In Nebraska live FOB purchases traded steady to 2.00 higher from 171.00- 172.00, when compared to the last reported market on Thursday. A light test was noted. A few dressed delivered purchases traded at 271.00, however, not enough for a full market trend. Wednesday was the reported dressed delivered purchase market at 270.00. In the Western Cornbelt, not enough purchases for a market trend. Wednesday was the last reported market with live FOB purchases at 170.00 and dressed delivered purchases at 270.00.

The USDA is indicating cash trades for live cattle from 169.00 – 172.00 and from 265.00 – 272.00 on a dressed basis (so far).

United States Cattle on Feed Up 3 Percent

 Cattle and calves on feed for the slaughter market in the United States for feedlots with capacity of 1,000 or more head totaled 12.0 million head on December 1, 2023. The inventory was 3 percent above December 1, 2022.

Placements in feedlots during November totaled 1.87 million head, 2 percent below 2022. Net placements were 1.81 million head. During November, placements of cattle and calves weighing less than 600 pounds were 535,000 head, 600-699 pounds were 440,000 head, 700-799 pounds were 380,000 head, 800-899 pounds were 288,000 head, 900-999 pounds were 140,000 head, and 1,000 pounds and greater were 85,000 head. Marketings of fed cattle during November totaled 1.75 million head, 7 percent below 2022. Other disappearance totaled 54,000 head during November, 5 percent below 2022.

For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be delayed to Wednesday, December 27, 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.

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**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


Fax: 312.256.0109



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