Written Commentary
MORNING LIVESTOCK FUTURES OUTLOOK
LIVE CATTLE
December live cattle staged a very strong rally to start the week, reversing Friday’s weakness on the strongest daily trading volume in over a month. A significant rally in the US stock market added to the positive tone. Cattle slaughter is expected to rebound with the full kill week this week, but still remains 13% lower year-over-year. US beef imports in July were up 26% from the previous year, while China’s year-to-date beef imports are down 13.9% from last year. Cash trade yesterday was very light at $182 in the north, down $1 from last week. Barclays Bank says a cattle supply recovery will not occur until 2026 and beef prices will see headwinds from cheaper alternative proteins. The 5-area, 5-day weighted average for the week is 181.05, down from 181.27 last week. Look for resistance on December live cattle at 179.10. The USDA estimated cattle slaughter came in at 114,000 head Monday. The USDA boxed beef cutout was up 20 cents at mid-session Monday and closed 89 cents lower at $308.52. This was down from $309.34 the previous week.
LEAN HOGS
The December hog market continued the selloff yesterday with the 2nd consecutive close below the 100-day moving average. Hog slaughter last week was 3.6% above year ago and carcass weights are 1% higher year-over-year, resulting in pork production rising 5% last week. Pork production is expected to remain strong through the 4th quarter. As cooler temperatures move in for the fall, hog weights can rise, especially with cheap corn to feed. December is nearing initial.382% retracement support at 70.10 with 50% retracement at 68.80. The CME Lean Hog Index as of September 5 was 86.24 down from 86.43 the previous session and from 87.04 the previous week. The USDA estimated hog slaughter came in at 486,000 head Monday. The USDA pork cutout, released after the close Monday, came in at $95.26, up 54 cents from Friday but down from $96.77 the previous week. The previous low was $94.72 on September 6. The previous high was $98.12 on September 3.
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