Live cattle continued to rally in Thursday’s trade, taking prices to new highs for the move. How much more upside is left?
Live Cattle (December)
A new high for the move and a new closing high for the move were achieved in yesterday’s trade as the market flirts with 4-star resistance from 189.47-190.075. If the Bulls can keep the momentum alive and chew through this pocket, a retest of the March highs would be the next objective, that comes in from 191.47-191.62. We’ve been in the camp that the market stalls out with prices near the upper end of the risk range, but the market has proven to be pretty resilient. With Funds holding their largest net long position since last October and volatility relatively low, we like looking at options as a way to help those with physical risk protect the downside.
Resistance: 189.47-190.075, 191.47-191.62
Pivot: 187.675-188.00
Support: 187.00-187.12, 184.55-185.20*
Daily Cattle and Beef Summary
Cutout values were weaker on Thursday afternoon with choice cuts .24 lower to 321.17 and select cuts 1.43 lower to 294.34. The 5-area average price for live steers was reported at 187.00 which we’d call steady. Thursday’s slaughter was reported at 124k head, 6k more than the same day last week and 3k more than the same day last year. Week to date slaughter comes in at 491k, that’s 3k less than last week but 10k less than last year.
Cattle on Feed Estimates
- On Feed: 99.7 (Range: 99.1-100.1)
- Placements: 96 (Range: 94.2-99.0)
- Marketings: 102 (Range: 98.1-103.4)
Seasonal Tendency Update
Below is a chart of the February 2025 live cattle contract (black line) compared to price averages over the last 5, 10, 15, 20, and 30 years.
*Past performance is not necessarily indicative of future results.
Volatility Update
Live cattle volatility remains relatively low which may present opportunities for those looking to hedge/manage downside risk.
Commitment of Traders Update
Friday’s Commitment of Traders report showed funds were net buyers of over 10k contracts through October 15th, expanding their net long to 88,301. That is the largest net long position since October 3, 2023.
Lean Hogs (December)
Lean hogs made new highs but reversed and closed below yesterday’s low, which does do some slight damage to what has been an impressive looking chart. The key pocket to keep an eye on through today’s trade is 77.90-78.25. If that gives way, you could see that spark additional long liquidation from Funds who’ve been on a multi-month buying spree.
Resistance: 82.50*
Pivot: 79.60
Support: 77.90-78.25, 75.25-76.00
Seasonal Tendency Update
Below is a chart of the December 2024 lean hog contract (black line) compared to price averages over the last 5, 10, 15, 20, and 30 years.
*Past performance is not necessarily indicative of future results.
Commitment of Traders Update
Funds have been on a buying spree for about 4-months, taking the net long position to the largest since April, now at 84,679. We are getting to the area of Fund length where risk of long liquidation and a high velocity move that could come with it may outweigh the upside potential left, at least in the near term.
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