Walsh Trading Daily Insights
Commentary
June Lean Hogs opened higher, traded down to the session low at 102.60 and then rallied the rest of the session to the high at 105.45. It settled at 105.15. The rally took price past resistance at 104.35 and settlement was comfortably above it also. This is a positive for the June Hogs and puts resistance at 106.85 in play (in my opinion). Meanwhile, the low tested support at the rising 100-DMA at 103.40 and the trade through and recovery is another positive for the market, (in my opinion). The recovery in June hogs off the new low made on May 12th may have traders thinking the decline was low enough and it is enticing spec buying. Hogs are not out of the woods yet as it must overtake the May 5th high at 107.525 to negate the run of lower highs and lower lows. There is strong resistance here as the 21-DMA is at 107.75 and is on the decline. In my opinion, futures will need confirmation from the cash market to sustain any future lengthening of this rally. Cash has been on the decline and seasonal strength needs to take hold and push cash higher. We’ll see… If settlement holds, we could see a test of resistance at 106.85. Resistance then comes in at the May 5th high, the 21-DMA and then 107.875. A failure below 104.35 could see price re-visit the rising 100-DMA and then the declining 13-DMA now at 103.15.
The Pork Cutout Index decreased and is at 100.23 as of 5/16/2022.
The Lean Hog Index was lower and is at 100.07 as of 5/13/2022.
Estimated Slaughter for Tuesday is 477,000, which is below last week’s 480,000 and above last year’s 467,000. Monday’s slaughter was revised lower to 470,000. The estimated total (so far) is 947,000, which is above last week’s 941,000 and last year’s 940,000.
August Feeder Cattle gap opened higher and traded to the high of the day at 168.70. With corn showing some weakness, you would think the gap opening higher would lead to a nice surge for Feeder Cattle, but it wasn’t to be… It broke down to the session low at 166.40 and settled nearby at 166.775. The breakdown took price below support at 167.15 and the low was just above the rising 50-DMA now at 166.275. Price is consolidating near the lows of the recent breakdown in price. The cash index, in my opinion is showing weakness and it will be hard for Feeders to hold onto rallies if this continues. The index just made a new low and it hasn’t been this low since April 20th, when it was at 153.90. A breakdown below the 50-DMA could see a test of the rising 100-DMA now at 165.60. Support then comes in at 163.50. If settlement holds, we could see price revisit resistance at 167.15 and maybe work its way back to the Tuesday high.
The Feeder Cattle Index decreased and is at 155.27 as of 5/16/2022.
August Live Cattle is now the lead contract as its volume has surpassed the volume of the June contract. It gap opened higher and traded to the session high at 134.40. The high was just below resistance at 134.55 and in a listless trading session, grinded lower the rest of the day to the low at 133.25. Settlement was just above the low at 133.475. Continued weakness could see price test support at 132.95 and the 130.45. A recovery could see price revisit resistance at 134.55. Resistance then comes in at the declining 21-DMA now at 134.725. The cash market has traded lower this week as the South has seen live trades down at 137.00 and in the North at 142.00 (which is lower than last week. Packers have been able to move cash lower, even as cutout prices start to creep higher.
Boxed beef cutouts were higher as choice cutouts increased 0.17 to 260.48 and select jumped 2.52 to 248.19. The choice/ select spread narrowed and is at 12.29 and the load count was 118.
Tuesday’s estimated slaughter is 125,000, which is even with last week and above last year’s 120,000. The estimated total for the week (so far) is 249,000, which is above last year’s 246,000 and last year’s 234,000.
The USDA report LM_Ct131 states: Thus far for Tuesday negotiated cash trading and demand have been light to moderate in the Southern Plains with live purchases 2.00 lower compared to last week at 138.00. Negotiated cash trading has been slow on light demand in Nebraska with a few dressed purchases from 226.00- 227.00, however not enough for a market trend. Last week in Nebraska live and dressed purchases traded at 144.00 and at 230.00, respectively. Negotiated cash trading has been mostly inactive on light demand in the Western Cornbelt and Colorado. Not enough purchases in these regions for a market trend. Last week in Colorado live purchases traded from 140.00-144.00. The last reported live trade in the Western Cornbelt was on Monday with live purchases at 142.00, and the last reported dressed trade was last week with dressed purchases from 227.00-230.00.
The USDA is indicating cash trades for live cattle from 137.00 to 145.00 and from 219.00 to 227.00 on a dressed basis (so far).
For those interested I hold a weekly grain (with Sean Lusk) and livestock webinar on Thursdays (except holiday weeks) and our next webinar will be on Thursday, May 19, 2022 at 3:00 pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.
**Call me for a free consultation for a marketing plan regarding your livestock needs.**
Ben DiCostanzo
Senior Market Strategist
Walsh Trading, Inc.
Direct: 312.957.4163
888.391.7894
Fax: 312.256.0109
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