December Lean Hogs opened lower, made the low of the day at 76.70, and then surged to the high at 77.90. It consolidated the rest of the session and settled near the high at 77.65. The move to the low was held in check by the rising 8-DMA now at 76.70.The rally took price past the 50-DMA now at 77.125 and the high poked above resistance at 77.80, with settlement just below the key level. The rally knocked out the potentially bearish Evening Star candlestick formation and established a new high for the recent up move in the December contract. The settlement price was also the highest settlement for the up move. This is positive for Hogs. The cash market remains in a tight range with the cutout index ranging from 94.00 to 96.00 and the cash index from 84.00 to 84.90. Slaughter continues to be smaller than the Hogs and Pigs report indicates and demand from exports and the consumer is strong. You would think with the lower slaughter, production would fall, but it hasn’t as weights are still above last year, which is likely balancing supply and demand, keeping the cash prices in the tight range they have been in. The December futures continue to narrow its discount to the Lean Hog Index. It finally broke above the 50-DMA on the continuous chart but was unable to settle above the key level at 77.80. This keeps the bullish traders on edge as they still have hurdles in front of them, and gives bears hope that the seasonals will kick in. The near-term seasonal is for supplies to increase and demand to falter in the coming weeks. If price breaks down from settlement, it could test support at the 50-DMA. A breakdown from here has support at rising 8-DMA. Support then comes in at 76.175. If price pushes past resistance at 77.80, we could test resistance at 78.80. Resistance is next at 79.80.
The Pork Cutout Index ticked higher and is at 95.07 as of 10/10/2024.
The Lean Hog Index was unchanged and is at 84.47 as of 10/09/2024.
Estimated Slaughter for Friday is 484,000, which is above last week’s 480,000 and last year’s 482,993. Saturday slaughter is expected to be 172,000, which is below last week’s 173,000 and last year’s 189,230. The estimated total for the week (so far) is 2,584,000, which is below last week’s 2,586,000 and last year’s 2,607,584.
November Feeder Cattle opened higher and rallied to the session high at 250.70. The rally took price above the 100-DMA which it has flirted with all week now at 250.05, but it was unable to move above the early week high at 250.80. The inability to take out resistance saw bulls give up on the day and it grinded lower the rest of the session, making the low at 249.375 and settling just above it at 249.80. The low approached support at the rising 8-DMA now at 249.25. The breakdown took price back below the 100-DMA keeping the market in consolidation mode, in my opinion. The Feeder index has been showing some strength this week and it rose to a new high for its recent up move at 250.05. With feeders in a short-term up trend and the index moving higher, you would think bulls would gear up and press the issue to higher prices. But we have had a nice rally since making the low on the continuous chart at 229.575 on September 9th and some consolidation may be in order to overcome the overbought condition in my opinion. If price holds settlement, it could re-test resistance at the 100-DMA. Resistance then comes in at 251.50 and strong trendline resistance is nearby at 251.65. A breakdown below the 8-DMA could see a re-test of support at 248.875. Support then comes in at the 200-DMA now at 247.825.
The Feeder Cattle Index increased and is at 250.05 as of 10/10/2024.
December Live Cattle opened lower, reversed and traded up to the session high at 188.55. It turned lower and grinded south for the rest of the session to the low at 187.40. It settled near the low at 187.575. The high is a new high for the recent up move and it took price above strong trendline resistance at 188.15 for the second day in a row. But the price action didn’t explode prices higher, and the volume was light, thus, it couldn’t hold the trendline and it pressed lower to test support at 187.725 and the rising 8-DMA now at 187.40. Settlement was above the 8-DMA. This should give the bulls some confidence. , but the resistance is strong in my opinion. The cash average should be higher again this week, which is encouraging for bulls, but the trade was lackluster at best, even as cutouts are moving higher as the packer cuts back on slaughter. The packer is looking to pressure producers and the retail industry by cutting back on slaughter, relying on the heavier carcass weights to keep production from collapsing. Demand is holding up well, but there are worries that the consumer will pull back if cutout prices continue higher, leading to even higher retail prices. With prices near all-time highs on the futures and at critical resistance, next week will be interesting. We’ll see!… If price can’t hold the 8-DMA, it could test support at 185.75. Support then comes in at 184.35. If settlement holds, we could see price re-test resistance at 187.725. Trendline resistance then comes in at 188.125. A rally past here could test resistance at 190.075.
Boxed beef cutouts were mixed as choice cutouts increased 1.27 to 311.22 and select fell 2.01 to 288.72. The choice/ select spread widened and is at 22.50 and the load count was 94.
Friday’s estimated slaughter is 106,000, which is below last week’s 108,000 and last year’s 110,931. Saturday slaughter is expected to be 6,000, which is below last week’s 12,000 and last year’s 6,816. The estimated total for the week (so far) is 586,000, which is below last week’s 611,000 and last year’s 616,259.
The USDA report LM_Ct131 states: Thus far for Friday in the Southern plains negotiated cash trade has been mostly inactive on light demand. In the Texas Panhandle on Thursday live FOB purchases traded at 187.00, on a light test. On Thursday in Kansas live FOB purchases traded from 186.00-187.00. In Nebraska and the Western Cornbelt negotiated cash has been slow on light demand. Compared to Thursday in Nebraska live purchases traded steady to 1.00 higher from 187.00-188.00. On Thursday dressed purchases traded at 296.00. Compared Thursday in the Western Cornbelt live FOB purchases traded steady from 187.00-188.00. On Thursday dressed purchase traded at 296.00.
The USDA is indicating cash trades for live cattle from 186.00 – 188.00 and 292.00 – 297.00 on a dressed basis (so far).
For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, October 15, 2024, 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. tested support at the Futures and options trading involves substantial risk and is not suitable for all investors. Therefore, individuals should carefully consider their financial condition in deciding whether to trade. Option traders should be aware that the exercise of a long option will result in a futures position. The valuation of futures and options may fluctuate, and as a result, clients may lose more than their original investment. The information contained on this site is the opinion of the writer or was obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in market prices. PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.
All information, communications, publications, and reports, including this specific material, used and distributed by Walsh Trading, Inc. (“WTI”) shall not be construed as a solicitation for entering into a derivatives transaction. WTI does not distribute research reports, employ research analysts, or maintain a research department as defined in CFTC Regulation 1.71.
