December Lean Hogs opened lower, tried to rally and traded to the high of the day at 73.225. It then broke down to the low of the day at 71.70. The range was completed by mid-morning and price consolidated and settled near the middle of the range at 72.475. The price action was within Friday’s trading range forming an inside candlestick. The initial rally took price past the key level at 72.8o and the break down was just below support at 71.85. Settlement was below the key level. The cash index has been declining and bulls paused as disappointment is building over the cash markets inability to rebound. The excitement over the solid export number from last Thursday is waning and traders need to see the cash markets improve, in my opinion. A pullback from settlement has support at 71.85 and then 71.325. Support then comes in at 69.90. A rally past the high could see resistance tested at 74.25.
The Pork Cutout Index decreased and is at 94.72 as of 10/06/2023.
The Lean Hog Index decreased and is at 83.03 as of 10/05/2023.
Estimated Slaughter for Monday is 486,000, which is even with last week and above last year’s 485,000.
November Feeder Cattle has formed a ledge at the lows of the recent down move. It opened lower and traded to the high at 251.40. The high was just above resistance at 251.30 and price then broke down to the low at 248.675. The low was just below support at 248.85. The range was completed and it consolidated the rest of the session and settled at 249.65. The range of the ledge is from the high at 252.325 (just below resistance at 252.35) and the low is at 248.225. The cash index has been declining since peaking at 254.09 on September 20th. With the fat cattle market grinding lower, producers have been hesitant on bidding up for feeders, in my opinion. A failure from Monday’s low could see price test support at the rising 100-DMA, now at 247.425. A breakdown below here could see support tested at 245.75. A rally past 251.30 could see at test of resistance at 262.35. A breakout above here could see price test resistance at 254.30.
The Feeder Cattle Index decreased and is at 249.73 as of 10/06/2023.
December Live Cattle opened lower and traded to the session high at 186.875. The rally stalled just below resistance at the declining 8-DMA now at 187.00. It turned lower and broke down, trading to the low at 185.20. It settled near the low at 185.35. The low and settlement was below support at 185.75. It formed an inside candlestick as the range was within Friday’s trading range. It has also formed a ledge with the high at 187.00 and the low at 184.60. I think the pullback was due to the Hamas attack on Israel as traders seemed to lose their appetite for risk. The cash market is quiet as producers and backers evaluate the situation and react accordingly as they always do in the beginning of the week. Producers are getting their numbers in order and packers are determining whether they can get better cutout prices and force producer sentiment lower to get cattle at the cheapest price possible. A recovery above 185.75 could see price revisit the Monday high. A rally past the high could see resistance tested at the rising 21-DMA now at 187.95. A breakdown from settlement could see support tested at 184.35. Support then comes in at 182.575.
Boxed beef cutouts were higher as choice cutouts increased 1.41 to 303.42 and select increased 1.72 to 277.50. The choice/ select spread narrowed and is at 25.92 and the load count was 75.
Monday’s estimated slaughter is 125,000, which is even with last week and below last year’s 126,000.
The USDA report LM_Ct131 states: So far for Monday in the Southern Plains and Nebraska negotiated cash trading has been at a standstill. In the Western Cornbelt negotiated cash trading has been inactive with very light demand. Not enough purchases for a market trend. Last week in the Southern Plains live FOB purchases traded at 182.00. For the previous week in Nebraska and Western Cornbelt live FOB purchases traded at 183.00 and dressed delivered purchases traded from 288.00-290.00.
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 on Tuesday, October 10, 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.
**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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