December Lean Hogs gap opened higher, traded down to the low of the day at 70.25, closing the gap and rallied to the session high at 71.925. It pulled back to the middle of the range and settled at 71.175. The rally took price to its highest level since October 10th as traders continued to narrow the discount of futures to the Lean Hog Index. The recovery took price past the 71.325 – 71.85 resistance band and then settled below it. It formed a Doji candlestick indicating indecision. The cash index continues to erode while the cutouts gained on Monday. The small bodied candle and the close below resistance puts Hogs in a precarious position. Even though Hogs have had a nice run to the upside, it is still in a down trend. Breaking down from the settlement price could see Hogs get pressured. A pullback from settlement could see support tested at 69.90 and then the 21-DMA now at 69.30. If Hogs can take out the Monday high, it could test resistance at 72.80.
The Pork Cutout Index decreased and is at 86.95 as of 10/27/2023.
The Lean Hog Index decreased and is at 77.95 as of 10/26/2023.
Estimated Slaughter for Monday is 487,000, which is above last week’s 486,000 and even with last year
January Feeder Cattle continued its trade within the Ledge formed with the high at 239.225 and the low at 233.35. Monday’s range was 237.10 to 235.45 low. Settlement was at 236.875. The rally stalled just below resistance at the 8-DMA now at 237.80. Settlement was below the key level at 237.25. The Feeder Index is floundering. Corn is stable while cattle is trying to stabilize. The futures market’s inability to bounce back and build a premium to the cash index makes me think Feeders may have been overdone to the upside and may want to test support at the 200-DMA on my continuous chart now at 227.775. A failure below the Monday low could see price revisit support at 234.475. Support then comes in at 233.10, 229.825, 228.05, 227.80 before the rising 200-DMA. If price can overtake resistance at 237.25, resistance could be tested at the declining 8-DMA and then 238.35. Resistance then comes in at 240.875.
The Feeder Cattle Index decreased and is at 236.53 as of 10/27/2023.
December Live Cattle opened higher and made the low at 182.575. The low was right on support at 182.575. It then rallied to the high at 183.75 and drifted the rest of the session and settled at 183.25. The rally took price past resistance at the declining 13-DMA now at 183.525 and penetrated the gap from the October 20th low at 184.425 to the October 23rd high at 183.65. The pullback kept price below it. There is strong resistance at 184.35, the 50-DMA 184.75 and the declining 21-DMA at 184.55. This indicates, in my opinion, strong resistance at the gap area. Futures just couldn’t get any energy to close the gap even as the cash market ended last week strong as packers were forced to get aggressive to finish off their needs for the week, making the cash high on Friday at 186.00 on a live basis. Plus, the Monday cutout was strong even as the load count was small. With the positivity in the cash market, traders must be nervous about the ability of the cash market to sustain itself up here as they wait for the producers showlist and packer indications on bids. A failure below the Monday low could see price test support at 181.175 and the nearby rising 100-DMA now at 181.10. Support then comes in at 179.40. If futures can push through the gap, a test of resistance at 185.75 is possible. Resistance then comes in at 187.725. A break out above the gap could be explosive because it will take a lot of energy to penetrate this area, so, if it does look out.
Boxed beef cutouts were higher as choice cutouts increased 1.71 to 309.28 and select increased 0.77 to 280.89. The choice/ select spread widened and is at 28.39 and the load count was 59.
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: Thus far for Monday in all trading regions negotiated cash trade has been at a standstill. Last week in the Southern Plains live FOB purchases traded at 185.00. Last week in Nebraska live FOB purchases traded from 183.00-186.00, while dressed delivered purchases traded from 290.00- 291.00, mostly at 290.00. Last week in the Western Cornbelt live FOB purchases from 183.00- 185.00, mostly from 183.00-184.00, while dressed delivered purchases traded at 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 31, 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
Walsh Trading, Inc. is registered as a Guaranteed Introducing Broker with the Commodity Futures Trading Commission and an NFA Member.
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