Harrington's Sort & Cull

Weekly Analysis: Looking at the Livestock Markets

Todd Hultman
By  Todd Hultman , DTN Grains Analyst
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After an eight-week rally retraced two-thirds of the decline from $68.00 to $44.00, December hogs turned lower again last week and may be ready for another challenge of 15-year support in the low $40s. (DTN ProphetX chart)

Live Cattle: December live cattle gained $0.60 last week to $116.77 per cwt, continuing to trade near the higher end of its sideways 2018 range of $107 to $120. U.S. beef production has been on a steady pace of nearly 3% growth all year and more of the same is expected in the fourth quarter. Cattle supplies have kept pace, and we have to wonder if the 85,076 noncommercial net-longs have pumped prices about as high as they are going to go for now. A close in December cattle below the October low of $116 would be short-term bearish, but this continues to look like a stable market.

Feeder Cattle: November feeder cattle slipped $0.52 last week to $154.10 per cwt, about $7.50 below the high of 2017. Like cattle, November feeders have traded in a relatively narrow, sideways range the past year, between this year's low of $137 and last November's high of $161.50. Unlike cattle however, feeders have the support of 5,169 commercial net-longs that find current prices attractive. While both 2018 cattle and feeder prices look stable, from a technical view, feeder prices appear to have the more bullish potential.

Lean Hogs: December lean hogs fell $3.40 last week to $51.60, the lowest close in nearly two months. The drop put an end to the eight-week rally that had retraced two-thirds of the decline from $68.00 to $44.00, which started on Halloween of 2017. USDA expects pork production to expand nearly 5% in the fourth quarter from a year ago, which should pull more hogs but may also pressure retail prices. Even though the short-term trend has turned down, December hogs have fifteen years of price support in the low $40s.

Comments above are for educational purposes and are not meant to be specific trade recommendations. The buying and selling of livestock and livestock futures involve substantial risk and are not suitable for everyone.

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

(CZ)

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