The October Live Cattle contract rallied on Tuesday, August 22, 2017, breaking out above Monday’s inside candle and trading to resistance at the 13 DMA (108.225). The high of the day was 108.325 and the market pulled back from here, ending the session at 107.65. Resistance remains at the 13 DMA and then 108.675.
A rally above the Tuesday high could lead to a test of resistance at 110.80. A breakdown from the 8 DMA (107.125) could lead to a test of the 106.00 support level. The negotiated cash market was quiet on Tuesday. The fedcattleexchange auction is to be held on Wednesday morning with 1,067 head for sale. Tuesday afternoon boxed beef cutout values were lower on Choice and Select on light to moderate demand and moderate offerings. Choice was down 0.06 at 193.03 and Select down 0.73 to 190.89 on 137 loads. The choice/ select spread widened to 2.14. The estimated cattle slaughter for Wednesday was reported at 118,000.
The September Feeder Cattle rallied off the 138.95 support level. It staged a strong rally as it surpassed the 8 DMA (142.00), reaching a high of 142.55. It ended the session just below the 8 DMA at 141.975. Breaking above the Tuesday high could lead to a test of resistance at 143.50. Resistance then comes in at 144.65. A pullback from the 8 DMA could lead to a test of support at 140.75, 139.90 and then 138.95.
The October Lean Hogs contract broke down below the 64.90 support level. It traded to a low of 63.35 and ended the session just above it at 63.825. A continued break down could lead to a test of the 61.80 support level. Resistance is at 64.90 and 66.75. Pork belly prices continue to collapse as it was down 12.24 to 158.32. Pork Belly demand has been a key driver for the Lean Hogs and a continued break down in price could lead to a pullback in the futures market.
Cold Storage Report
Total red meat supplies in freezers were up 1 percent from the previous month but down 8 percent from last year. Total pounds of beef in freezers were up 4 percent from the previous month but down 8 percent from last year. Frozen pork supplies were down 1 percent from the previous month and down 7 percent from last year. Stocks of pork bellies were down 21 percent from last month and down 65 percent from last year.