October Lean Hogs traded to a new low for the down move, settled down and settled in the middle of its trading range. The high was at 78.725, the low at 77.75 and settlement at 78.175. It formed a Spinning Top candlestick and was the narrowest range in the past 7 sessions. Cash continues to leak lower and is keeping pressure on futures. Traders are feeling the pain of a deteriorating Chinese economy and the potential for economic malaise spreading around the world. Wednesday’s range was stuck between resistance at 78.80 and the 77.80 support level. Continued selling could see price breakdown below support at 77.80 and test the 76.175 support level. If resistance at 78.80 is taken out, we could test resistance at 79.80 and then 80.45. Exports are out before the Thursday open and could influence trade.
The Pork Cutout Index decreased and is at 109.92 as of 8/15/2023.
The Lean Hog Index decreased and is at 101.93 as of 8/14/2023.
Estimated Slaughter for Wednesday is 471,000, which is above last week’s 468,000 and below last year’s 482,000. The estimated total for the week (so far) is 1,408,000, which is above last week’s 1,350,000 and last year’s 1,405,000.
September Feeder Cattle displayed some weakness but went nowhere. It consolidated within Tuesday’s trading range, making the high at 250.45 and the low at 248.775. Settlement was at 249.00. Feeder Cattle is in a trading range with the high at 254.30 and the low at 247.625. It is trading in the lower end of the range. The high was stopped by resistance at the 13-DMA, now at 250.675 and the low by support at 248.85. There is also strong support nearby at the rising 21-DMA now at 248.45. A breakdown from the 21-DMA could see price move towards support at 245.75. If settlement holds, resistance could be tested at 251.30. Resistance then comes in at 252.175.
The Feeder Cattle Index increased and is at 244.94 as of 8/15/2023.
October Live Cattle broke down below support as outside market weakness affected the fat futures in my opinion. This went contrary to cutouts which are showing signs of life as grocers buy for the last holiday of the summer season. Cash has been active early this week as packers seem to be trying a new strategy. But if cutouts remain strong, producers will be emboldened to keep prices in the upper end of the cash range. Cash looks mostly steady so far this week and with the Cattle on Feed report out on Friday, it is interesting to see packers buying earlier in the week. The high was at 180.50 and the low came in at 179.10. Settlement was near the low at 179.275. Settlement was below support at 179.40 and keeps the pressure on futures. A breakdown below the low could see price test support at 178.10. Support then comes in at the rising 50-DMA now at 177.275. If cattle can regain its footing and retake 179.40 now resistance, it could test resistance at 181.175. There is short-term moving average resistance just below here, so it will be an interesting day on Thursday, in my opinion. Resistance then comes in at 182.575.
Boxed beef cutouts were higher as choice cutouts increased 1.73 to 308.99 and select increased 1.74 to 284.77. The choice/ select spread narrowed and is at 24.22 and the load count was 118.
Wednesday’s estimated slaughter is 123,000, which is above last week’s 122,000 and below last year’s 127,000. The estimated slaughter for the week (so far) is 367,000, which is below last week’s 369,000 and last year’s 375,000.
The USDA report LM_Ct131 states: Thus far on Wednesday negotiated cash trade was limited on light to moderate demand in the Texas Panhandle. In Kansas trade was light to moderate trade in demand in Kansas. Compared to last week in the Southern Plains, live FOB purchases traded 1.00 lower at 179.00. Negotiated trade was limited on light to moderate demand in Nebraska and the Western Cornbelt. Nebraska reported a few live FOB purchases at 188.00 with a few ranging from 187.00-188.00 in the Western Cornbelt. However not enough purchases in any region for an adequate market test. The latest established market in the Western Cornbelt was on Tuesday with live purchases at 188.00. Last week dressed purchases in the Western Cornbelt traded at 295.00. Last week in Nebraska, live FOB purchases traded at 188.00 and dressed delivered purchases traded at 295.00.
The USDA is indicating cash trades for live cattle from 178.00 – 188.00 and from 284.00 – 297.00 on a dressed basis (so far).
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays (except holiday weeks) and our next webinar will be on Thursday, August 17, 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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