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April Lean Hogs opened higher and traded to the high of the day at 88.325. The high was right at resistance and it failed, breaking down the rest of the session to the low at 87.325 and settling near the low at 87.40. The breakdown stalled just above support at 87.10, but was another new low for the recent down move. Headwinds have appeared in the cash market as the Lean Hog Index has turned lower after a strong rally to start the new year. Cutouts were also in a strong rally that stalled but it may have turned another corner with the recent recovery over the past couple of days. Hogs could continue to have issues with exporting to China as a researcher with the Chinese Academy of Agricultural Sciences has stated there is no more room for growth for pork demand in the future, that demand is stable and is unlikely to rise any time soon. Their imports of pork and offal declined 15.7% last year and was the 4th year in a row of lower imports. China expects imports to decline again this year. This will keep the US Meat Federation on their toes in my opinion as they continue to try to find avenues for growth in our pork exports. Slaughter was weak again last week and this could set up the cutout for more increases as we move towards summer and the grilling season. We’ll see!… A breakdown from settlement could see price test support at 87.10 and then the rising 50-DMA is next at 86.50. Support then comes in at 85.325. If price can hold settlement, it could revisit resistance at 88.325. A rally past here could see price test resistance at 90.40.
The Pork Cutout Index decreased and is 97.49 as of 02/21/2025.
The Lean Hog Index decreased and is at 90.53 as of 02/20/2025.
Estimated Slaughter for Monday is 490,000, which is even with last week and above last year’s 488,184.
March Feeder Cattle gap opened higher and pulled back to close the gap while making the session low at 268.10. The breakdown took price to support at the rising 21-DMA now at 268.35 which held and led to a surge in price. The surge took price past resistance at the declining 21-DMA now at 270.325 and then the key level at 271.00 to the high at 272.90. This put price in the upper end of the large breakdown candle from February 3rd. It was a nice short-covering rally as the Feeder Index has bounced back over the past few days after breaking down to its recent low. Futures have once again narrowed its discount to the index after a running a large discount of over 10 handles. A breakdown from settlement could see price test support at 271.00 and then the 21-DMA. Support then comes in at 269.00. If settlement holds, we could test resistance at 273.675 and then 274.65. We’ll see!…
The Feeder Cattle Index increased and is at 279.37 as of 02/21/2025.
April Live Cattle opened higher and traded to the session low at 193.875. The breakdown took price back to test support at 193.95. It held and price rallied to the high at 195.35. It consolidated at the end of the session and settled at 195.10. The rally stalled just below the rising 50-DMA now at 195.50 and the February 19th high at 195.475. This was in my opinion a short-covering rally that put price in the upper end of its recent trading range with the low at 193.025 and 195.475 the high. It has formed a Ledge and a breakout above the high or a breakdown below the low could determine the next directional move. Cash likely will wait till Wednesday at the earliest to trade unless the packer can get some producer to give up the edge and trade at a lower low than last week. They have cut back on slaughter in a big way hoping to pressure both the producer and the retailer and it has worked to some degree, getting cash prices down but unable to lead to a surge in the cutout as this is a down period for the cutout and the retailer isn’t in a hurry to pay higher prices for beef. Slaughter is expected to be low again this week and the packer didn’t buy a lot of cattle last week and likely will try to pull back on purchases again this week to try and build supply in the feedlot to put pressure on the producer and keep them on their heels. Producers are not worrying because their belief for the most part is the reason for the low slaughter is the numbers aren’t there for the packer to buy and they will soon need to get aggressive and then have to pay up for cattle like they did just a few weeks ago when out of the blue they too price to heights never seen before. We’ll see!… Futures are still below the 50-DMA and even with the rally on Monday haven’t taken prices anywhere unlike the Feeders. If price can’t hold settlement, a breakdown could lead to a test of support at 193.95 and then 193.225. Support then comes in at 192.70. If price can hold settlement, we could see price test resistance at the 50-DMA and then the declining 13-DMA now at 196.00. Resistance then comes in at 196.625.
Boxed beef cutouts were higher as choice cutouts jumped 2.96 to 313.73 and select increased 1.41 to 303.97. The choice/ select spread widened and is at 9.76 and the load count was 85.
Monday’s estimated slaughter is 95,000, which is even with last week and below last year’s 121,493.
The USDA report LM_Ct131 states: So far for Monday, negotiated cash trade has been at a standstill all regions. The most recent market in all regions was last week. Live FOB purchases traded at 199.00 in the Southern Plains. In Nebraska live FOB purchases traded from 199.00-200.00. In the Western Cornbelt live FOB purchases traded from 199.00-201.00. In Nebraska and the Western Cornbelt dressed delivered purchases traded at 315.00.
The USDA is indicating no cash trades for live cattle and on a dressed basis (so far).
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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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