Livestock Analysis | Sept. 3, 2024

Livestock Analysis

Livestock Analysis
Livestock Analysis
(Pro Farmer)

Hogs

Price action: October lean hog futures climbed 30 cents to $82.525 and settled nearer session high.

Fundamental analysis: Surging wholesale pork prices helped lead a rebound in hog futures today. After opening lower, October lean hogs bottomed out about a half-hour into today’s session before rebounding and closing higher on the session. Pork cutout breaking back above the psychological $100.00 mark likely played a role in that strength, as each cut was higher at midsession, leading whole cutout $3.22 higher to $100.45. Movement was light though, at just 134.43 loads, which opens the door for weakness this afternoon is packers try to increase movement by lowering prices. Traders continue to tighten the spread between the CME lean hog index and nearby October futures. The CME lean hog index was most recently quoted at $86.47 as of Aug. 29. Packer submission issues delayed USDA data for the preliminary calculation, though that clearly did not dissuade traders from continuing to anticipate a rebound in cash hog prices in September, which has been rare in recent years.

Technical analysis: October lean hog futures closed at the highest mark in over three months as bulls continue to hold the near-term technical advantage. Conditions are quickly nearing overbought, which could lead to some profit-taking in the next few days. Additional strength has bulls looking to overcome Friday’s high of $83.00, which is reinforced by resistance at $83.50. Support comes in at $81.675 then the 10-day moving average at $80.65.

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 rose 67 1/2 cents to $179.275. October feeder cattle gained $1.575 at $239.325. Both markets closed nearer their session highs.

Fundamental analysis: The cattle futures markets today saw some short covering and perceived bargain hunting, but gains were limited by slipping cash market fundamentals. The gains in feeder futures today were especially impressive given the solid gains seen in corn futures.

Cash cattle prices last week fell for the fifth straight week, averaging $183.81, down $1.73. We expect cash cattle prices this week to be around steady and possibly firmer. With the recent drop in cash cattle prices, it’s likely producers will become even less receptive to lower packer bids. Today’s noon report showed Choice-grade boxed beef value rose $2.14 to $311.48, while Select-grade rose $3.80 to $299.62. The Choice-Select spread narrowed to $11.86. Movement at midday was light at 39 loads. Cattle market bulls are hoping still-solid consumer demand for beef at the meat counter will continue to encourage retailer beef features. Grocers are likely to ramp up their buying this week to start building inventories for beef features in early October, which is national pork month.

Technical analysis: The live and feeder cattle futures bears have the overall near-term technical advantage. Prices are still in five-week-old downtrends on the daily bar charts. 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 $180.175 and then at $181.00. First support is seen at today’s low of $178.05 and then at $176.35. 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 today’s high of $240.15 and then at $242.00. First support is seen at today’s low of $236.825 and then at $235.00.

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.