Walsh Trading Daily Insights
Commentary
July Lean Hogs broke out to a another new high and settlement on Monday, reaching 123.60 and settling at 122.10. The low was 121.00. The high was just below resistance at 124.00 and it was up the limit at the high. Sellers took over and pressed Hogs lower and it formed a shooting star candlestick. This is a potentially bearish formation if the market trades below the Monday low. Settlement was below the 122.275 resistance level, which along with the shooting star candlestick could fuel profit taking. A failure from the Monday low could see support tested at 119.90. The rising 8 DMA is nearby at 119.00. Support then comes in at 117.20. A breakout above the high could see price test resistance at 125.50 and then 127.70. Cash fundamentals remain strong, in my opinion and have been fueling the rise in Hogs. On a potentially negative note, there are contract negotiations going on in a Smithfield plant in South Dakota that is not going well. Union workers rejected a contract from the company and are threatening to go on strike…This could lead to volatility in the market if the negotiations don’t get resolved.
The Pork Cutout Index increased and is at 129.50 as of 6/04/2021.
The Lean Hog Index increased and is at 114.75 as of 6/03/2021.
Estimated Slaughter for Monday is 483,000, which is above last week’s holiday 2,000 and last year’s slaughter of 445,000.
August Feeder Cattle gap opened lower and traded down to support at 147.30 making the low just above it at 147.425. Corn had rallied overnight and opened higher from Friday. The rally in corn waned and turned south which led to bulls coming back to life and bidding up Feeder Cattle. The ensuing rally took price up to the high of the day at 150.60 and a positive settlement at 150.20. The rally took price past resistance at 149.975 and a settlement above the flat 50 DMA now at 150.11. This is positive for Feeder Cattle and along with a jump in the Index could lead to a positive start to Tuesday’s trade. Corn’s overnight session should also impact Feeders. If price can hold settlement, we could see a test of resistance at 151.55 and then 152.30, in my opinion. Resistance then comes in at 153.50. A failure from 149.975 could see price re-test support at 148.40 and 147.30. Support then comes in at 146.20.
The Feeder Cattle Index surged and is at 141.07 as of 6/04/2021.
August Live Cattle drifted lower on Monday, dipping below support at 117.825 to the low at 117.40. The high was at 118.175 and settlement was below support at 117.775. A breakdown below 117.825 could see price test support at 116.55. Support then comes in at the rising 200 DMA at 115.31 and then 114.65. If price can hold settlement a test of resistance at the 50 DMA (119.01) and 119.375 is possible. Resistance then comes in at the 100 DMA at 120.06 and then 120.80. Cattle as traders wait for any indication that the high is in for cutouts and what will packer interest in cattle will be as a result in this topping process.
Boxed beef cutouts decreased as choice cutouts declined 0.38 to 338.60 and select fell 2.56 to 309.17. The choice/ select spread widened to 29.43 and the load count was 98.
Monday’s estimated slaughter is 119,000, which is above last week’s 2,000 and last year’s 112,000.
The USDA report LM_Ct131 states: So far for Monday in the Southern Plains and Western Cornbelt negotiated cash trading has been at a standstill. In Nebraska negotiated cash trading has been mostly inactive with very light demand. Not enough purchases for a market trend. Last week in all regions live purchases traded at 120.00. Last week in Nebraska and Western Cornbelt dressed purchases traded from 190.00-191.00.
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, June 10, 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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