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February Lean Hogs
February Lean Hogs opened higher before retreating to the session low at 83.925. However, a strong morning cutout gave bulls the upper hand, driving the price to a high of 86.25. Despite this, uncertainty returned, and prices consolidated, ultimately settling at 85.60. Lower-than-expected slaughter numbers continue to support cash markets. The decline in indices has stalled and begun to rebound, ending the week on a stronger footing.
Weights remain consistent, and consumer demand appears to be improving, possibly due to retailers anticipating better holiday sales as beef prices remain high. The lower slaughter numbers may also suggest that the USDA’s hog supply analysis was inaccurate, potentially indicating a shortage as we approach year-end.
The upcoming Hogs and Pigs report on December 23rd will shed light on revisions to heavier weight classes. If the trend of reduced slaughter persists, hog prices could gain momentum in January, favoring long positions.
Technical Levels:
- Support: 85.325, 21-DMA at 85.275, 83.325
- Resistance: 86.50 (13-DMA), 87.10, 200-DMA at 87.375, 88.325
Indices and Slaughter:
- Pork Cutout Index: 92.66 (12/12/2024)
- Lean Hog Index: 83.92 (12/11/2024)
- Estimated Weekly Slaughter: 2,573,000 (down from 2,602,000 last week).
January Feeder Cattle
January Feeder Cattle opened lower but rallied to a high of 259.025 before declining to a low of 256.35. Although the Live Cattle market provided some support, feeders settled lower at 257.65.
The early decline could be attributed to the USDA’s announcement about resuming Mexican cattle imports, initially planned before year-end but now pushed to the new year. Efforts to eradicate screwworm with sterile fly production in Central America are ongoing, with production increased to 95 million flies from 20 million last year.
Technical Levels:
- Resistance: 258.925 (trendline), 261.05
- Support: 257.60 (13-DMA), 257.00 (8-DMA)
Feeder Cattle Index: 262.59 (12/12/2024)
February Live Cattle
February Live Cattle started the day lower but rebounded mid-morning from a low of 190.375, reaching a high of 192.25 before settling at a new all-time high of 192.025.
Strong boxed beef cutouts and consumer demand for choice cuts are driving prices higher. Despite lower slaughter numbers, packers remain aggressive in cash markets, likely due to supply shortages. The Cattle on Feed report on Friday could influence market direction.
Technical Levels:
- Resistance: 192.70 (new high), 193.50
Boxed Beef Cutouts (12/12/2024):
- Choice: 316.39 (+1.15)
- Select: 283.86 (+3.38)
- Choice/Select Spread: 32.53
Estimated Weekly Slaughter: 609,000 (down from 614,000 last week).
USDA LM_Ct131 Report:
Negotiated cash trading remains light in the Southern Plains, with live FOB purchases at 191.00–192.00 in Texas. In Nebraska and the Western Cornbelt, trading was limited, with the last reported prices at 195.00–196.00 (live FOB) and 305 (dressed).
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
bdicostanzo@walshtrading.com
www.walshtrading.com
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