Livestock Analysis | Sept. 5, 2024

Livestock Analysis

Livestock Analysis
Livestock Analysis
(Pro Farmer)

Hogs

Price action: Big wholesale losses Wednesday afternoon seemed to undercut hog futures Thursday. Nearby October fell 87.5 cents to $80.70.

Fundamental analysis: The hog and pork complex seemed to be in good shape at Wednesday’s close, with the hog index looking set to turn higher, while pork cutout was still within striking distance of the $100.00 level. However, yesterday’s early pork slippage apparently turned into a rout in the afternoon, with cutout ending the day at $95.29, down $3.53 on the day. That likely triggered today’s early futures losses, with midsession news of cash and wholesale firmness only modestly curbing the selling. Pork cutout skid another 12 cents to $95.17 at noon today, while the cash hog index sustained Monday’s reversal. The CME confirmed Tuesday’s preliminary quote at $86.27, which represented a 12-cent daily gain. Wednesday’s USDA data implies the index quote will rise another 16 cents to $86.43 when it’s officially published tomorrow. We still think improved demand from packers, grocers and consumers will power a September rally in hog and pork values. That should translate into futures support as well.

Technical analysis: Bulls still hold the short-term technical advantage in October lean hog futures, although today’s price action weakened their grip. The drop and close below the 10-day moving average near $81.36 made that level initial resistance. That’s backed by today’s high of $81.775, then by Wednesday’s top at $83.375. Expect psychological resistance at $85.00 as well. Today’s low marked initial support at $80.45. Considerable backing is likely to be provided by the psychologically important $80.00 level. A close below that point would have bears targeting support at the contract’s 20- and 40-day moving averages near $78.26 and $76.55, respectively.

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 futures dove $1.975 to $177.25 and settled nearer session lows. October feeder cattle futures plunged $2.875 to $234.575.

Fundamental analysis: Cattle futures underwent heavy selling pressure, spurred higher by weaker than expected cash trade. After light, higher trade early this week in Iowa, trade picked up in Kansas mid-week, averaging $180.00. That is down $2.67 from last week’s average for Kansas and will likely be enough to set precedents for another week of lower cash cattle trade. Futures fell concurrently with weaker cash trade today, making it clear that traders had anticipated a rebound in the cash market this week. While movement has still been fairly light, around 1,435 head versus 8,601 a week ago, traders clearly anticipate weaker trade to finish out the week. Wholesale beef prices were mixed this morning with Choice cutout continuing to show relative strength. Choice cutout firmed 73 cents to $312.33 while Select sunk $1.81 to $297.58. Movement was 71 loads this morning.

Feeder cattle futures fell alongside fats today as the feeder cattle index marked a fresh nearly four-month low. The index continues to trend lower and traders anticipate the index will continue to fall into early 2025, evidenced by futures trading at a discount through March of next year. Feeder futures moving lower today despite a dip in the corn and meal markets is a testament to the relative weakness of the market.

Technical analysis: Live cattle futures underwent heavy selling pressure this morning but saw modest profit-taking into the close. Prices fell below the 10-day moving average at $178.25 which will stand as initial resistance. Further strength would have bulls looking to overtake resistance at $179.40 then the psychological $180.00 mark. Continued selling pressure finds support at $176.825 then the psychological $175.00 mark.

October feeder cattle futures saw continued selling off 20-day moving average resistance that sparked yesterday’s downside move. Bears continue to hold the technical advantage. The 20-day marks staunch resistance at $238.75, with additional resistance at $236.95 and $235.00 on the way. Bulls are seeking to hold support at $234.00 then $231.325 on continued selling pressure.

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.