Walsh Trading Daily Insights
Commentary
June Lean Hogs gap opened higher, sneaked past resistance at 101.975 to the session high at 102.425 and then consolidated the rest of the session. Traders weren’t able to push price past the March 18 high at 102.50 in front of the Export Sales and The Quarterly Hogs and Pigs Report due out on Thursday. They were content to stay near the high. Price settled above resistance at 101.975, but below the previous high. Trade on Thursday will be influenced by to Sales report in the morning. The Hogs and Pigs report comes out after the close, so traders will also be mindful of that. Resistance is at the March 18 high and then 104.35. A failure from 101.975 could see support at 100.075 tested. Support then comes in at 98.475.
The Pork Cutout Index increased and is at 103.93 as of 3/23/2021.
The Lean Hog Index increased and is at 93.47 as of 3/22/2021.
Estimated Slaughter for Wednesday is 491,000 which is below last week’s 494,000 and last year’s 503,000. Tuesday slaughter was revised lower to 465,000. The weekly estimated total (so far) is 1,437,000, which is below last week’s 1,469,000 and last year’s 1,501,000.
May Feeder Cattle was strong on Wednesday, trading past resistance at 147.30 to the session high at 147.95. It settled at 147.325. Optimistic traders are expecting cash prices to start moving higher and the index which tracks cash is inching higher…. But has a long way to go to justify these high futures prices. If price can break out above settlement, we could see a test of resistance at 148.40. Resistance then comes in at 149.975. A failure from 147.30, could see price test support at 146.20. Support then comes in at 145.05.
The Feeder Cattle Index increased and is at 134.86 as of 3/23/2021.
June Live Cattle traded between support (119.375) and resistance (120.80) on Wednesday with the range from 119.525 low to 120.65 high. Settlement was at 120.30. Futures are still expensive to the cash market even as the cash price moved higher today as it traded at 115.00 – 116.00 on the fedcattleexchnge.com auction held early today. This is a positive step, however for the cash market with the packers willing to pay higher prices early in the week in a visible manner on the electronic exchange. This could embolden producers to look for higher levels later in the week. Tomorrow’s session is important as Thursdays are a day in which price has a tendency to get pressured in the futures market as it seems packers or somebody tries to spook producers to settle for lower cash prices late in the week by knocking down futures. We will see if that holds true for this Thursday’s trading session. The 50 DMA inched higher today and is at 120.95 so futures must continue to climb the resistance wall to go after the March 18 high at 122.70. If price can trade above the 50 DMA, a test of resistance at 121.90 is possible. Then comes the 122.70 trading range high. A failure from settlement could see support re-tested at 119.375. Support then comes in at 117.80.
Boxed beef cutouts were mixed as choice cutouts increased 0.85 to 234.84 and select declined 1.16 to 224.07. The choice/ select spread widened to 10.77 and the load count was 126.
Wednesday’s estimated slaughter is 121,000, which is above last week’s 114,000 and below last year’s 125,000. The weekly estimated total (so far) is 354,000, which is above last week’s 342,000 and below last year’s 367,000.
The USDA report LM_Ct131 states: Thus far for Wednesday negotiated cash trading in the Southern Plains has been light on light to moderate demand with live purchases 1.00 higher compared to last week at 115.00. Negotiated cash trading in all other major feeding regions has been limited on light demand with a few live purchases in Nebraska from 115.00-116.00, however not enough purchases for a full market trend. Last week in the Northern Plains live purchases traded at 114.00. In Nebraska dressed purchases traded from 180.00-182.00. For the prior week in the Western Cornbelt live purchases traded from 114.00-115.00 and dressed purchases traded from 180.00-182.00.
The range for the week (so far) is 113.00 – 116.00 for live cattle and 183.00 – 185.00 for dressed cattle.
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, March 25, 2021 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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