For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, November 19, 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 lower and traded down to the session low at 79.10. This is a new low for the recent down move and traders quickly took price to the session high at 80.60 as the morning cutout rebounded causing some thoughts that the breakdown in cutouts is over, in my opinion. This idea didn’t last long with the market pulling back and settling near the low at 79.50. The break down to the low took price below support at 79.80 and the declining 100-DMA now at 79.675. The decline to the low stopped just above support at 78.80 and the rally couldn’t sustain the move above resistance at 80.45. This implies negative sentiment for the moment, in my opinion. Export sales came out this morning and was disappointing in my opinion as it was only 19,100 MT down noticeably from the previous week and down 12% from the 4-week average according to the USDA. With the US Dollar rallying, it makes our exports more expensive and could continue to curtail our exports going forward. This could dampen demand and continue to put pressure on the cutout as importers would demand lower prices to counter the Dollar strength, in my opinion. We are also in the seasonally strong slaughter period and this could also put pressure on price. Slaughter has been below last year for around 7 out of the past 9 weeks, but numbers are above 2,600,000 which is a hefty number, in my opinion. The seasonality’s suggest continued struggles for the Hog market. So, it will be an interesting last two weeks of November. We’ll see!… If price breaks down from settlement, it could test support at 78.80. Support then comes in at the flattening 50-DMA now at 78.425. If price can hold settlement, it could test resistance at the declining 100-DMA and then 79.80. Resistance then comes in at 80.45.
The Pork Cutout Index decreased and is at 98.49 as of 11/14/2024.
The Lean Hog Index decreased and is at 89.78 as of 11/13/2024.
Estimated Slaughter for Friday is 484,000, which is below last week’s 485,000 and above last year’s 480,991. Saturday slaughter is expected to be 225,000, which is above last week’s 168,000 and below last year’s 244,257. The estimated total for the week (so far) is 2,633,000, which is above last week’s 2,605,000 and below last year’s 2,647,405.
January Feeder Cattle opened higher and down ticked to the low at 243.125. Price surged from here as the Feeder market was the darling of the livestock complex to the session high at 248.225. The 5-handle surge took a break with a pullback to support at 245.75 and a rally into the close took price higher again as it settled at 247.225. The rally stopped at the cross of two opposing trendlines at 248.10. Excitement kept building in the Feeders as the Feeder index continued its move higher as feedlots have been very aggressive in purchasing cattle, ignoring the pressure the fat market has been under recently. There have been variant guesses as to who has been the aggressive buyers of feeders, some have guessed its farmer feeders because of the ownership of corn and others who say no way, it isn’t the farmer feeder but the large feedlots because of their commitments to the packer down the road and them being under supplied. Interesting divergence in opinions. Either way the index has surged to a new high and the question will be can it continue higher or is it going to end? Before today the November contract, which expires on the 21st of November has been trading a few handles below the index. I think nervous shorts were worried about the strength in the index and the futures soared ending briefly the discount to the index on the rally to the high at 251.85. Now it is close to the new index which came out after the close. Can cash hold its gains? We’ll see!… If price holds settlement, it could test resistance at the trendlines which are now at 247.75 and 248.30 respectively as one is moving lower and the other higher. Resistance then comes in at 248.875. The 200-DMA now at 249.575 follows. A breakdown from settlement could see a test of support at the declining 100-DMA now at 246.225. Support then comes in at 245.75.
The Feeder Cattle Index increased and is at 252.31 as of 11/14/2024.
February Live Cattle is now the lead contract as its volume has exceeded the volume of the December contract. It opened lower and dipped to the low at 184.65, stopping just above support at 184.35. It reversed course and rallied, surging briefly when Feeders exploded to its high, reaching 186.50. Live cattle couldn’t sustain its rally, pulling back and settling at 185.25. The rally stopped just above resistance at the flattening 21-DMA now at 186.175 and the pullback saw it settle below resistance at 185.75. The price action formed a Shooting Star candlestick and, on the continuous chart it looks like a potentially topping candle. The fat cash market is moving in the opposite direction of the Feeder cash market as it moves lower from last week. Cutouts have fallen hard and it is creating problems for the packer and they haven’t been aggressive in the cash market, cutting back on cattle purchases and slaughter to compensate for the lower cutouts. They are trying to find some support for the cutout by doing so and are worried about another break down below 300.00 in my opinion. It is going to be a hard battle for producers as they are also struggling with higher break-evens going forward. The retail industry seems to be in control right now as they have successfully pressured cutouts lower during the seasonally timed down-turn. We are in Thanksgiving mode with the concentration on turkey’s and hams. The seasonals turn higher after Thanksgiving as the retail industry buys for Christmas and other holidays. Watch the cutout and the 300.00 level. Retail demand for beef has remained strong and prices in the grocery stores are stable with consumers continuing to eat beef. This has helped the retailers as they dominate right now both sides of their market while the packer and producer struggle. This will likely change at some point as the one with the most to lose usually does at some point. We’ll see!… If price can’t hold settlement, it could test support at 184.35. Support then comes in at the flattening 100-DMA now at 183.20. Support then comes in at 182.575. If settlement holds, we could see price re-test resistance at 185.75. Resistance then comes in at the 21-DMA.
Boxed beef cutouts were lower as choice cutouts decreased 0.46 to 303.34 and select decreased 0.52 to 276.14. The choice/ select spread widened and is at 27.20 and the load count was 115.
Friday’s estimated slaughter is 120,000, which is above last week’s 116,000 and below last year’s 120,333. Saturday slaughter is expected to be 3,000, which is below last week’s 9,000 and last year’s 20,546. The estimated total for the week (so far) is 606,000, which is below last week’s 619,000 and last year’s 639,367.
The USDA report LM_Ct131 states: Thus far for Friday in in the Texas Panhandle negotiated cash trading has been light on light demand. Compared to the last reported market on Thursday, live FOB purchases traded steady at 185.00. In Kansas negotiated cash trading has been at a standstill. The last reported market was Thursday with live FOB purchases at 185.00. In Nebraska and the Western Cornbelt, negotiated cash trading has been limited on light demand. Not enough purchases for a market trend. In these regions, the last reported market was Thursday with live FOB purchases at 185.00 and dressed delivered purchases at 290.00.
The USDA is indicating cash trades for live cattle from 182.00 – 186.00 and 287.00 – 300.00 on a dressed basis (so far).
**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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