Livestock Analysis | Sept. 16, 2024

Livestock Analysis

Livestock Analysis
Livestock Analysis
(Pro Farmer)

Hogs

Price action: October lean hog futures closed $1.475 higher to $79.925, ending the day nearer session highs.

Fundamental analysis: Lean hog futures posted gains today despite continued weakness in the cash market, supported by technical buying. October lean hog futures bounced off uptrend resistance stemming from the early July low. Futures were also supported by a bounce in wholesale pork prices, which were up $1.09 to $208.20 at midsession. Every cut except hams posted gains this morning and movement was quite strong at 208.2 loads. Traders will look to cutout, which has been weak in the last few weeks, to lead a rebound in the cash market. The CME lean hog index is down another 48 cents to $84.87 as of Sept. 12, which is down $8.77 from the seasonal peak on Aug. 1. The preliminary calculation puts the index down another 49 cents to $84.38 tomorrow, which would be a fresh for-the-move low. October futures are trading at a healthy discount to the cash market, which could lead to some sideways trading in futures, barring any significant shift in the cash market in the near future.

Technical analysis: October lean hog futures opened higher this morning and saw sustained strength throughout most of today’s session. Bulls maintain a slight technical advantage. The 10-day moving average at $80.20 marks initial resistance. Additional strength eyes resistance at $81.10 then the Sept. 3 for-the-move high close at $82.525. Support comes in at the 10-day moving average at $79.55 then last week’s low of $78.20.

What to do: Get current with feed advice. Carry all production risk in the cash market for now.

Hedgers: Carry all risk in the cash market for now.

Feed needs: You should have all corn-for-feed and soymeal needs covered in the cash market through August.

Cattle

Price action: October live cattle fell 42 1/2 cents to $177.225 and nearer the session low. October feeder cattle lost 12 1/2 cents to $239.00 and nearer the session low.

Fundamental analysis: The live and feeder cattle futures markets have moved well off their September lows, but price action has recently stalled amid shaky cash cattle and boxed beef fundamentals. Selling pressure today was limited by last week’s average cash cattle trading price being up 93 cents at $182.11, ending six straight weeks of lower average weekly prices.

Today’s noon report showed wholesale boxed beef prices firmer, with Choice grade up 6 cents at $304.97 and Select grade up $1.63 at $295.80. The Choice-grade beef price Friday fell to a five-month low. Movement at midday was good at 83 loads. The Choice-Select spread is presently at $9.17. Beef packer margins are back into the black, which should help to improve packer demand for fed cattle in the coming weeks.

This week’s FOMC meeting of the Federal Reserve will almost assuredly see the Fed cut interest rates. That should work to augment upbeat consumer attitudes amid declining inflation and lower borrowing costs. Such also likely means better consumer demand for beef at the meat counter in the coming months.

Technical analysis: The live cattle futures bulls and bears are on a level overall near-term technical playing field amid choppy and sideways trading. The next upside price objective for the live cattle bulls is to close October futures above solid resistance at $182.525. The next downside technical objective for the bears is closing prices below solid technical support at the August low of $173.725. First resistance is seen at last week’s high of $178.90 and then at $180.00. First support is seen at today’s low of $176.875 and then at $176.00.

The feeder cattle bears have the overall near-term technical advantage. The next upside price objective for the feeder bulls is to close October futures prices above technical resistance at $243.45. The next downside price objective for the bears is to close prices below solid technical support at the August low of $229.35. First resistance is seen at last week’s high of $241.375 and then at $243.45. First support is seen at $237.525 and then at $236.00.

What to do: Get current with feed advice. Carry all production risk in the cash market for now.

Hedgers: Carry all production risk in the cash market for now.

Feed needs: You should have all corn-for-feed and soymeal needs covered in the cash market through August.