For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, April 08, 2025, 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.
June Lean Hogs gap opened lower and crashed. It traded down limit and settled there. The range was from 94.425 for the high to the low and settlement price at 91.55. The open saw price below critical levels at 95.30 and the rising 13-DMA now at 95.125. The collapse saw price take out support at 93.50, 92.375 and the rising 21-DMA now at 92.025. Tariffs, this time retaliatory tariffs by China and a crashing Equity market were the main story for the breakdown in Hogs in my opinion. The retaliatory tariffs from China are for a 34% tariff on all US goods. The tariff could effectively shut down the US pork exports to China. China’s pork buying has been erratic anyway as they are frequently out of our market but then all of a sudden, they are in for a week or two with one of those weeks a fairly big purchase. This was the case this past report released on Thursday where they were the second largest buyer of US pork. I consider China a tease purchaser, giving glimpses of being a great customer and then pulling back the reins and leaving one to wonder what is going on. It is just that their potential is so huge as we saw during their African Swine Fever purchases that we must always pay attention to their needs. The tariffs by China could lead to a reciprocal tariff by the US as the President stated when he announced the tariffs on April 2nd. This could become a tit for tat battle going forward unless cooler heads prevail. That left traders with loads of uncertainty and going into the weekend, they wanted out. This came alongside the Equity markets continuing their purge to the downside, creating evermore fears of recession and people not eating. The cash fundamentals are still fairly strong for the pork industry as we move closer day by day to the Easter holiday and grilling season. Cutouts ended the week on an upswing as the Friday cutout closed in positive territory after a strong morning print but, traders were focused on the bigger picture and the uncertain weekend events that could lead to more liquidation. We’ll see!… A breakdown from settlement could see price test support at 90.40 and the rising 50-DMA now a t 90.35. A breakdown from here could see price test support at 88.325. If price can retake the 21-DMA, it could re-test resistance at 92.375. Resistance then comes in at 93.50.
The Pork Cutout Index decreased and is at 95.40 as of 04/03/2025.
The Lean Hog Index was down ticked and is at 88.72 as of 04/02/2025.
Estimated Slaughter for Friday is 486,000, which is above last week’s 471,000 and last year’s 482,471. Saturday slaughter is expected to be 117,000, which is above last week’s 70,000 and last year’s 115,204. The estimated total for the week is 2,520,000, which is above last week’s 2,480,000 and last year’s 2,408,223.
May Feeder Cattle gap opened lower and collapsed. The high was at 281.325 and traders took price from there to down limit, where it stopped at 274.875. It settled down limit and limits will be expanded for Mondays’ trade at a whopping 16.5 handles. Whoa!! With the plunging Equity markets in full display, traders continued to liquidate longs at a furious pace hoping to keep profits in place but panic set in and price rapidly collapsed likely eliminating any profits traders once held and with the continued plunging Equity markets, traders just said get me out at any price. Ugh! This puts the futures market in a bad way as the charts look ugly. The cash market didn’t seem as upset over the plunging markets and the Feeder Index made another new all-time high at 291.95. With the plunge in futures will cash prices continue to move higher? We are coming into a period where trading will subside and with the futures plunge could sellers hold onto their cattle longer, not wanting to test the water, unless they are forced to? We’ll see!… The May futures went through many support levels with the close below the critical now flattening 50-DMA at 276.425. The limit decline left price just above support at 274.65. If trade continues lower on Monday, we could test support at 273.675 and then 271.00. If futures can hold settlement we could consolidate within the Friday range.
The Feeder Cattle Index ticked higher and is at 291.95 as of 04/03/2025.
June Live Cattle gap opened lower and tried to rally to close the gap. The rally failed with the high at 203.15, stopping just short of the key level at 203.50 and punching through the 21-DMA now at 202.775. The China retaliatory tariff news coupled with the still unfinished business of the re-registration of US meat plants for export kept the pressure on the futures. This along with the outside market collapse sent futures price below 200.00 to the low at 198.20 where it settled down limit. The plunge took price below the flattening 50-DMA at 199.75 and the 199.10 support level. The 199.10 support level was a key area that contained the selling when the then lead contract (April) pulled back after its breakout rally. This puts pressure on bullish traders as the market now has a weak technical outlook in the short-term. Long liquidation was fast and furious as speculators couldn’t handle the heat as their overall position was weighted to the upside and when price started giving way, it cascaded sending shock waves that didn’t stop until finally the market closed for the weekend. The cash market held up better than the futures as the cash fundamentals still likely favor the producer but, the packer sees blood in the water with the futures breakdown and with the cutout unable to sustain it strong early week rally, they will try to bring cash prices toward the futures price. Cash was basically steady to a little lower with producers willing to let cattle go before the packer changed their tune. The question now is whether the tariff war heats up over the weekend or stabilizes where it’s at right now? Stabilizing will likely allow traders to become comfortable with the tariff levels allowing the market to retrace some losses. A destabilizing weekend could bring more downside to the futures markets in general, which could lead to weakness in the cash markets. We’ll see!… If price trades below the low, it could test support at 196.625. A breakdown below here could see support tested at the rising 100-DMA now at 195.225. If settlement holds, price could consolidate within the Friday range.
Boxed beef cutouts were mixed as choice cutouts ticked higher 0.08 to 338.45 and select decreased 0.66 to 317.18. The choice/ select spread widened and is at 21.27 and the load count was 102.
Friday’s estimated slaughter is 109,000, which is above last week’s 107,000 and below last year’s 116,565. Saturday slaughter is expected to be 10,000, which is below last week’s 17,000 and last year’s 23,020. The estimated slaughter for the week (so far) is 591,000, which is below last week’s 609,000 and last year’s 614,045.
The USDA report LM_Ct131 states: So far for Friday in the Southern Plains, negotiated cash trading has been light on light demand. Compared to the last reported market on Thursday with live FOB purchases traded steady at 208.00. In Nebraska and Western Cornbelt, negotiated cash trading has been light on moderate demand. In Nebraska, compared to the last reported market on Thursday, live FOB purchases traded 2.00-3.00 lower at 210.00 and dressed delivered purchases traded steady at 335.00. In the Western Cornbelt, compared to last the last reported market on Thursday, live FOB purchases traded mostly steady at 213.00. Not enough dressed delivered purchases for a market trend. On Thursday dressed delivered purchases traded at 335.00.
The USDA is indicating cash trades for live cattle from 204.00 – 215.00 and from 329.00 – 345.00 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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