February Lean Hogs in a quiet holiday inspired trade, opened higher and traded to the high of the day at 69.075. It reversed and broke down to the low of the day at 67.65. It consolidated the rest of the session and settled at 67.975. The break down took price below support at 67.80 with settlement just above it. This was a new low for the recent down move and the settlement below Thursday’s low keeps the pressure on bulls. Monday is a holiday so the next trading session is on Tuesday. January 1st 2024 marks the full implementation of the California law known as Prop 12. I don’t know what effect full implementation will have on the market, but so far prices have risen in California due to the law and full implementation doesn’t offer any relief in my opinion. The odds are for higher prices and an “interesting” marketplace in California, in my opinion… Will that keep larger supplies in the rest of the country, making a two-tiered marketplace?? We’ll see… If price can hold settlement, we could retest resistance 68.75. Resistance then comes in at 69.90. If futures break down below support at 67.80, we could test support at 66.55 and then the December 13th low at 66.225. A failure from here could see support tested at 65.80 and 65.40.
The Pork Cutout Index increased and is at 82.23 as of 12/28/2023.
The Lean Hog Index decreased and is at 65.57 as of 12/27/2023.
Estimated Slaughter for Friday is 485,000, which is above last week’s 428,000 and last year’s 482,000. Saturday slaughter is expected to be 319,000, which is above last week’s 61,000 and last year’s 239,000. The estimated total for the week (so far) is 2,233,000, which is below last week’s 2,420,000 and above last year’s 2,184,000.
March Feeder Cattle opened higher and ticked to the high of the day at 244.45. It broke down from the high to the low of the day at 222.725. It consolidated and settled near the low at 223.10. It was a quiet holiday trade with the high just below resistance at 224.475 and the low just below support at the rising 13-DMA now at 222.825. Feeders have formed a rectangle with the high at 227.175 and the low at 221.10. Price is trading in the lower end of the rectangle. The cash index has been erratic, rising into Christmas and falling at the end of the year. It peaked at 222.06 and today’s print came in at 215.98. A break down below the 13-DMA could see support tested at 222.225 and then the low of the rectangle. Support is nearby at 220.875 and then219.40. If price can recover and trade above 223.55, it could revisit the Friday high and nearby resistance. Resistance then comes in at 225.675 and then the declining 50-DMA now at 226.45.
The Feeder Cattle Index decreased and is at 215.98 as of 12/28/2023.
February Live Cattle opened higher and traded to the high at 170.00, it reversed and broke down the rest of the session to the low at 168.35. It settled near the low at 168.50. It was a weak and quiet trade on the last trading session of the year as the cash market showed some strength with packers needing to buy cattle more than producers needing to sell. Guys that I spoke with were willing to take their cattle into next week, thinking packers will have to get more aggressive in their purchases. So, they were disappointed in the futures trade but it didn’t sway them. Cash ended the week trading at 174.00, which is the highest price since December 1st, when it traded at 175.00 on a Friday. A positive way to end the year in the cash market. Futures have also formed a rectangle with the high at 171.00 and the low at 167.35. The Friday high was below resistance at 170.375 and the low and settlement was below support at 168.625 and in the lower end of the rectangle range. 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 and then 170.375. A break out above 171.00 could see price approach resistance at the declining 50-DMA now at 174.10. The 50-DMA crossed below the 200-DMA (174.20) which is technically bearish the futures market. The December contract expires and settled at 173.675.
Boxed beef cutouts were mixed as choice cutouts decreased 1.57 to 289.71 and select increased 1.09 to 260.33. The choice/ select spread narrowed and is at 29.38 and the load count was 94.
Friday’s estimated slaughter is 125,000, which is above last week’s 117,000 and last year’s 119,000. Saturday’s slaughter is expected to be 33,000, which is above last week’s 7,000 and below last year’s 35,000. The estimated total for the week (so far) is 508,000, which is below last week’s 621,000 and last year’s 535,000.
The USDA report LM_Ct131 states: Thus far for Friday in the Texas Panhandle negotiated cash was slow on light demand. The most recent market in the Texas Panhandle was Thursday with live FOB at 172.00. In the Kansas negotiated cash was slow on light to moderate demand. The most recent market in Kansas was Thursday live FOB purchases at 172.00. In the Nebraska negotiated cash was slow on light demand. The most recent market was Thursday with live FOB purchases from 172.00-173.00, with dressed delivered purchases at 273.00. In the Western Cornbelt negotiated cash was slow on light demand. The most recent market in the Western Cornbelt was Thursday with live FOB purchases at 172.00, dressed delivered purchases at 273.00, on a light test.
The USDA is indicating cash trades for live cattle from 170.00 – 174.00 and from 269.00 – 273.50 on a dressed basis (so far).
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be delayed to Wednesday, January 2, 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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