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For those interested I hold a weekly livestock webinar on Tuesdays and my next webinar will be Tuesday, January 07, 2024, at 3:15 pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.

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February Lean Hogs opened lower and traded to the session low at 80.00. The low is the same as the Tuesday low forming a Tweezer Bottom candlestick formation. The breakdown also took price below support at 80.45 and the 100-DMA now at 80.425. Price was able to turn higher and it rallied past resistance at 81.70 to the high at 81.825. It pulled back at the end of the session and settled at 81.15. The recovery off the low wasn’t enough to get price above the Tuesday high at 82.00 and the result was a consolidation day forming an Inside Candlestick. But the Tweezer Bottom could set the stage for a further recovery if price can overtake the Tuesday high. February Hogs have broken down below the trendline on a Head and Shoulders Top formation on December 30th and has a measured move potential down to 75.975. With this formation active, the Tweezer formation could see price test the Head and Shoulders Trendline now at 83.075. The recovery in Hogs came as the cutout price in the morning showed strength, causing some short covering on the first trading session of the new year. The strength didn’t last however as the afternoon report showed the cutout in negative territory. This could cause some confusion on Friday as traders try to determine whether the cash market is firming or not. We get exports before the open and this could help traders in their analysis. But, in my opinion, the cash market is struggling and with the Dollar remaining strong, could start to hinder exports as we move forward into the new year. We’ll see!... If price can’t hold settlement, it could re-test support at 80.45 and the 100-DMA. Support then comes in at 79.80. If price can hold settlement, it could revisit resistance at 81.70. The December 30th high is next and then the trendline. 

The Pork Cutout Index decreased and is at 93.98 as of 12/31/2024. 

The Lean Hog Index down ticked and is at 84.27 as of 12/30/2024.

Estimated Slaughter for Thursday is 489,000, which is below last week’s 490,000 and last year’s 491,092. The estimated total for the week (so far) is 1,381,000, which is above last week’s 1,151,000 and below last year’s 1,446,390. 

March Feeder Cattle opened higher and made the session low at 263.00. It rallied from here and surged, trading to the high at 266.95. It consolidated near the high the rest of the session and settled at 266.20. This was a strong start to the new year, establishing a new all-time high for the lead contract on the continuous chart at the session high. This took out the previous high at 264.95 established on May 29th, 2024. Bulls were excited to start the year, as they took Feeders to the new high. The high is also the contract high for the March contract as traders anticipate continued strength in the cash market as we head into uncharted territory and a new year. The Feeder Index is just shy of its all-time high established on December 11th at 263.07. The index has been choppy over the holidays as sales were practically non-existent during this time. It is the fat cattle market that is inspiring traders as the packer seems to be stuck between a rock and a hard place. The strength in fat prices is causing traders to anticipate more aggression for Feeder buying as supply is expected to be limited in the short-run and I am being told that wheat fields continue to inspire cattle buyers as they would love to put more cattle on the promising wheat fields. We’ll see!... If price holds settlement, it could test resistance at the all-time high. Resistance then comes in at R1 at 267.77, R2 at 269.33. A breakdown from settlement could see a test of support at 264.675.

The Feeder Cattle Index was unchanged and is at 261.05 as of 12/31/2024. 

February Live Cattle started the new year “rockin n rollin,” gap opening higher, closing the gap at the session low at 191.525 and then blasting to another new all-time high for the lead contract at 193.95. It settled near the high at 193.60. This is the third new high in less than a month as traders are expecting the packer to continue paying up for cattle as supplies remain tight. Even as cattle in feedlots remain at extreme levels, it is the packer need for weights to stay high as they seem to believe that there isn’t enough replacement cattle out there, so they want heavier and heavier cattle to compensate for that. This keeps the producer in the driver’s seat as they don’t feel the need to unload cattle at packer prices. This is important in my opinion as break evens for producers are high and they need price to continue higher to remain in business, in my opinion. The packer is believed to be short-bought and with only a brief period to buy cattle, they are expected to outbid the other guy to keep plants going. They were able to goose cutouts at the end of year to its highest levels of the season, but it looks like the cutout is starting to pull back as we start the new year, leaving packers on the short-end of the stick. The packer struggles could continue down the road as the Walmart plant in Nebraska is expected to come online around April. This could make things even more competitive as we move forward. Do we finally have true competition among the packer coming up? They are also under pressure from McDonalds as they sue the majors for what they believe was unfair practices during the pandemic. How do they get back control of the market? Weather is expected to play a damaging role for weight gain as wintry conditions are expected. How do they get back control of the market? Cash traded as high as 199.50 on the mandatory report on Thursday. How do they get back control of the market? Can they? We’ll see!... If price can’t hold settlement, it could consolidate within Thursday’s range. If settlement holds, we could see price test resistance at R1 at 194.525. Resistance then comes in at R2 at 195.45. R3 is at 196.95. 

Boxed beef cutouts were lower as choice cutouts decreased 0.74 to 323.48 and select dipped 0.29 to 294.23. The choice/ select spread narrowed and is 29.25 and the load count was 116.

Thursday’s estimated slaughter is 125,000, which is above last week’s 119,000 and below last year’s 125,224. The estimated total for the week(so far) is 350,000, which is above last week’s 275,000 and below last year’s 373,234. 

The USDA report LM_Ct131 states:  So far for Thursday, negotiated cash trading in Kansas has been light to moderate on good demand. Compared to last week early live FOB purchases traded 3.00-4.00 higher at 196.00. Negotiated cash trading in all other trading regions was limited on good demand. However, not enough purchases for a full market trend. Last week in the Texas Panhandle, live FOB purchases traded from 192.00- 193.00. For the prior week, live FOB purchases traded from 196.00-197.00 in Nebraska and 195- 197.00 in the Western Cornbelt. Last week in both regions dressed delivered purchases traded at 307.00 on a light test.

The USDA is indicating cash trades for live cattle from 192.00 – 199.50 and from 310.00 – 315.00 on a dressed basis (so far).

**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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