Technically Speaking

October live cattle fell $1.02 to $180.15 in the week ending Sept. 1, 2023, holding above important sources of support and not straying far from the all-time high of $185.75, made on July 20. So far in 2023, cattle slaughter is down 4.1%, compared to a year ago at this time as lower inventory and lighter weights have forced packers to slow down production. Technically speaking, October cattle have trended higher all year, except for one brief sell-off, related to concerns about the economy in March. With October prices holding above both, their 100-day average at $174.80 and above the August low of $177.62, the uptrend continues.

For the week ending Sept. 1, 2023, October lean hogs rallied from a brief test of prices below their 100-day average near $80 and closed up $3.22 at $83.05. The week's higher close adds weight to the argument that October hog prices appear to be recovering from their earlier sell-off, which resulted in a low of $68.62 on May 26 earlier this year. Larger-than-expected hog inventory in early 2023 plus concerns about how California's Proposition 12 would affect the industry-hurt producer profitability in early 2023 and may have curtailed expansion plans.

Technically speaking, the sell-off in October hogs below the 100-day average Aug. 14 should have inspired more selling, but prices showed little follow-through. This week's higher on Sept. 1 was a bullish change in momentum. There may be some resistance at the August high of 86.75, but for now, the trend looks up.

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The comments above are for educational purposes only and are not meant as specific trade recommendations. The buying and selling of commodities, futures or options involve substantial risk and are not suitable for everyone.

Todd Hultman can be reached at Todd.Hultman@dtn.com.

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