Cattle Markets Crash, Hogs lower to end the Week
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October Lean Hogs opened unchanged, made its way to the low at 90.275 and then quickly rallied to the high at 91.25. It pulled back at the end of the day to settle near the low at 90.675. The Friday range was the tightest range for the past seven days, which could lead to a larger move as volatility usually picks up when this happens. The breakdown took price back to the key level that the Hogs have been revolving around since October took over as the lead contract. The key level is at 90.40. The October futures price action had been tightly wound around that key level before breaking down to the low on August 1st at 87.925 and then rallying to the high at 93.275 on August 6th. It has now come back to the key level as traders remain unsure of the cash market. Cutouts have been in a tight range, up and down with the index stuck in the 116 – 118 range and are now at the low end of its recent range. The cash index has also been stuck. It has been floating from 108.50 to 110.50 since October futures took over. Demand has been unstable as the much-needed export sales have been down from last year at this point in the year. The past 2 ½ months have seen sales up and down as Mexico has been an unstable customer as prices rose and tariff discussions caused them to pull back on purchases. The same with China. Their situation has been messy as the Chinese economy has cratered and the hog market has been over-supplied as producers produced and no one was in a position to buy, creating a deflationary environment. The government is working with the major producers to continue to cut back on sows and supply to attempt to support prices. Proposed liquidation of sows is supposed to bring sow supply down by 2%, which in the short run could limit their need for pork as they work down their excess supply. However, they were our biggest buyer of pork on the last report. Consumer demand has been good but not great. Slaughter has been down. It is much lower than anticipated for this period along with low weights, therefore keeping production down. This has helped the cutout stay stable but unable to break out above 120. We still have the seasonal slaughter build upcoming but so far that hasn’t played out as disease has limited supply more than anticipated. We’ll see!... If price can take out the Friday high, we could see price re-test resistance 92.375. Resistance is nearby at the rising 200-DMA now at 92.70. A failure from the Friday low could see price revisit support at 88.325. Support then comes in at the August 1st low.
The Pork Cutout Index increased and is at 116.76 as of 08/07/2025.
The Lean Hog Index increased and is at 110.10 as of 08/06/2025.
Estimated Slaughter for Friday is 470,000, which is even with last week and above last year’s 447,599. Saturday slaughter is expected to be 51,000, which is above last week’s 22,000 and below last year’s 97,248. The estimated total for the week (so far) is 2,350,000, which is above last week’s 2,336,000 and below last year’s 2,379.420.
September Feeder Cattle opened lower, made the session high at 349.625 and then crashed. It traded down the entire session, going limit down at the end of the day and settling limit down. The low and settlement was at 340.375. Today’s crash came about as the Thursday high broke through 350.00, reaching 350.20 and was 13 handles above the Feeder Index creating what I call the snapback. Futures have a tendency to come back towards the index whether it is 9 to 16 handles above or below the index. On Friday, we saw the snapback. With early rumors of a screwworm event in Oklahoma, futures traders said get me out. Rumors have not been substantiated, just like the Missouri and Texas rumors were dismissed, but futures couldn’t come back. I think this had to do with the large premium futures had to the index. The breakdown brought futures much closer to the index and near recent futures over index premiums. The index made a new all-time high on Friday, continuing its upside. We are still facing a low supply of cattle and with Mexico still out of the picture, Southern buyers must, in my opinion remain aggressive buyers of they want to remain in the cattle business. We’ll see!... A breakdown from settlement could see price test support at the rising 8-DMA now at 339.125. Support then comes in at 337.575. If settlement holds, price could consolidate within the Friday range.
The Feeder Cattle Index increased and is at 337.21 as of 08/07/2025.
October Live Cattle opened lower and made the high at 232.375. It reversed course and crashed. It broke down the rest of the session trading to the low at 225.60. It settled near the low at 225.975. The breakdown brought price down to near the lint, moving over 6 handles lower with the limit 7.25. A crashing Feeder market with the screwworm rumor set price on its downward trajectory in my opinion. Once the selling started it kept building as nervous longs panic sold as we headed towards the weekend. Cash, however, still saw steady trading with last week as producers refused to give in as the packer pulled away from its early bids. Volume looked light so we could see show lists and packer needs build for next week. Supplies remain tight and cutouts had a strong showing this week, so if we continue to see strength in the cutout next week, producers won’t be likely to give in to packer demands for lower prices. The cash average will likely be near last week’s all-time high and the packer will try to bring that down next week. We are in the seasonal for the cutout to rally as the retail industry buys beef for the Labor Day holiday, so cutouts are expected to go higher as we move towards the holiday. The packer will try to use any follow-through to the downside in futures to limit cash prices. Slaughter continues to be on the low end as we are at the lowest numbers for this time of year in a long time. This is their only method of controlling prices without shutting plants. This has helped with the recent advance in the cutout, but it hasn’t stopped the advance in cash prices. Rumors seem to be the new way to slow the advance in cash prices. We’ll see!... A failure from settlement could see price test support at the rising 21-DMA now at 224.475. Support then comes in at 223.275. If price can hold settlement, it could test resistance at 226.60. Resistance then comes in at 230.425.
Boxed beef cutouts were mixed as choice cutouts ticked lower 0.10 to 378.84 and select increased 1.34 to 355.09. The choice/ select spread narrowed and is at 23.75 and the load count was 103.
Friday’s estimated slaughter is 88,000, which is below last week’s 93,000 and last year’s 105,165. Saturday slaughter is expected to be 1,000, which is even with last week and above last year’s 507. The estimated slaughter for the week (so far) is 536,000, which is above last week’s 535,000 and below last year’s 587,582.
The USDA report LM_Ct131 states: So far for Friday, negotiated cash trade has been light to moderate on moderate demand in Nebraska and the Western Cornbelt. Early live purchases in Nebraska have been at 245.00 and early dressed purchases have been from 378.00-385.00, but not enough for an adequate market test. The last established market in Nebraska was last week with live purchases from 245.00-247.00 and dressed purchases from 383.00-385.00, mostly at 383.00. Early live purchases in the Western Cornbelt have been from 240.00-242.00, with a few up to 245.00, but not enough for an adequate market test. The last established market in the Western Cornbelt was last week with live purchases ranging from 240.00-245.00, mostly at 245.00, and dressed purchases were mostly at 383.00. Negotiated cash trade has been mostly inactive on moderate demand in all other feeding regions. The last established market in the Texas Panhandle was last week at 235.00. The last established market in Kansas was last week from 235.00-236.00.
The USDA is indicating cash trades for live cattle from 237.00 – 245.00 and from 374.00 – 385.00 on a dressed basis (so far).
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Ben DiCostanzo
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