Hogs Consolidate While the Cattle Markets Make New All-time Highs
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October Lean Hogs opened higher at the high of the day(91.00). It immediately broke down and traded to the session low at 89.90. All in the first 5-minutes of the trading session. It consolidated the rest of the session and settled near the high at 90.875. October Hogs have been in a trading range since taking over as the lead contract. The trading range is from 91.975 to 89.175. The price action has been trading around the key level at 90.40 with the high of the range challenging resistance at the rising 200-DMA. The range tightened on Monday and could lead to a larger price move if the action takes out the low or the high. This could set the next directional move for Hogs if price breaks away from the range. Production has struggled as weights and slaughter are mostly below expectations. This has kept supplies tighter than expected and the cutout and the cash market have reaped the benefits. The indices have bounced back off their lows and are at the high end of their ranges. It looks like the PRRS and PEDV viruses have taken a toll on production efforts by the US. Exports continue to be a drag but US consumers are eating more meat protein and are working pork products into their eating mix, keeping pork demand strong in my opinion. Higher prices and tariff battles have limited exports for the US in my opinion. We do have trade agreements evolving and with the ASF continuing to wreak havoc across Asia and parts of Europe we could see a rebound in exports as we progress through the year. We also have beef prices at record levels that could keep pork demand strong as people move towards the cheaper product. This could keep pork prices elevated. We’ll see!... If price can take out the Monday high, we could see price test resistance at the rising 200-DMA now at 92.10. Resistance is nearby at 92.375. A failure from support at 90.40 could see price test the trading range low at 89.175. Support then comes in at 88.325.
The Pork Cutout Index increased and is at 118.25 as of 07/25/2025.
The Lean Hog Index increased and is at 110.28 as of 07/24/2025.
Estimated Slaughter for Monday is 460,000, which is above last week’s 447,000 and below last year’s 472,061.
August Feeder Cattle gap opened higher and surged to a new all-time high for the lead contract at 335.975. The market reversed course and crashed. It traded to the low at 331.20 and closing the gap established on the open. Price bounced back, rallying to the middle of the range settling at 333.525. Friday afternoon saw a bullish Cattle Inventory report and a bullish Cattle on Feed report come out after the close. We also had a new all-time high established for the Feeder Cattle Index that was topped on Monday afternoon. Eager bulls took price to new heights and then profit taking took over as the futures soared over the index. The snapback took price just below last week’s highs and it kept a small premium over the index on the break. Futures maintained their premium to the index as traders look for cash prices to continue higher. Cash continues to set new highs across various weight classes and we will likely see prices hold as the lack of cattle coming in from Mexico keeps feeder supply limited down south, forcing all buyers to pay up for cattle. The on-feed report was down because of the closed border with Mexico as the north all had higher numbers (NE, KS, IA) and Texas numbers cratered. As long as the border is closed dure to the Screwworm, we will likely continue to see limited supply. We’ll see!... A breakdown from settlement could see price re-test support at 332.075. Support then comes in at 329.0755. If settlement holds, price could test resistance at the all-time high at 335.975. Pivot resistance is next at R2 at 338.175. R3 is at 340.375.
The Feeder Cattle Index increased and is at 329.93 as of 07/25/2025.
October Live Cattle gap opened higher and rallied to the high at 225.575. The high is a new all-time high for the lead contract. It turned lower and broke down to the low at 222.975. The breakdown closed the gap and tested support at the 8-DMA now at 222.925. It held and price recovered and rallied to near the high before dipping into the close to settle in the upper end of the range at 224.775. The bullish cattle reports took the cash price to a new high for live cattle at 245.00. Dressed cattle neared its high, reaching 384.00. The packing industry waiting for futures to breakdown has failed them yet again in their procurement efforts. They continue to slow the kill with last week’s slaughter at 549,000 the lowest for this time of year since 2015. This slowdown hasn’t helped the packing industry reclaim control of the market. They continue to buy cattle with time and they hope this will help them gain control of the market. With weights so far not surging despite their slaughter slowdown, producers seem to be current and in no hurry to sell their cattle. The reports show limited supply because of the Mexico shutdown and we are not seeing any major retention. Cattle supply is just tight. It will likely remain tight for the foreseeable future and when retention begins in earnest it will get tighter still. There is a rumor that a plant is shut down for an upgrade. This could last for a couple of days. Slaughter will remain low and the packer hopes this will build supply and put producers on edge. They also hope we will see a resurgence in the cutout. This week the cutout starts off in a positive way but the load count was low. Buying for the Labor Day holiday will start soon. Can this elevate the cutout price for the packer? Can the continued slowdown in slaughter build supplies and help the packer regain control of cash prices? We’ll see!... A failure from settlement could see price re-test support at 223.275 and the rising 8-DMA. Support then comes in at the rising 13-DMA now at 222.35. If price can hold settlement, it could test resistance at the Monday high. Resistance then comes in at pivot resistance at R2 at 227.00. R3 is at 228.40.
Boxed beef cutouts were higher as choice cutouts increased 1.05 to 367.73 and select increased 1.98 to 346.85. The choice/ select spread narrowed and is at 20.88 and the load count was 91.
Monday’s estimated slaughter is 108,000, which is above last week’s 105,000 and below last year’s 114,308.
The USDA report LM_Ct131 states: So far for Monday, negotiated cash trade has been mostly inactive on light to moderate demand. The last established market in the Texas Panhandle was last week from 230.00-232.00. The last established market in Kansas was last week from 230.00-232.00. The last established market in Nebraska was last week with live purchases from 242.00-245.00 and dressed purchases at 380.00. The last established market in the Western Cornbelt was last week with live purchases from 238.00- 242.00, mostly 240.00, and dressed purchases at 380.00 on a light test.
The USDA is indicating no cash trades for live cattle and on a dressed basis (so far).
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Ben DiCostanzo
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