Walsh Trading Daily Insights
Commentary
October Lean Hogs opened lower, tried to overtake the 200 DMA at 89.15, rallying to make the high at 89.375 and failing…breaking down to test support at 87.10, making the low just above it at 87.275. It limped higher to settle at 88.025. Hogs ended the week and the month with weakness… settling below the 200 DMA and support at 88.325 as traders are starting to believe cutout prices will move lower and are feeling the heat from the discovery of the African Swine Fever in the Dominican Republic. A continuation lower could see support re-tested at 87.10. Support then comes in at 85.325. If Hogs can rally above the key level at 88.325, a re-test of the 200 DMA is possible. Resistance then comes in at 90.40.
The Pork Cutout Index increased and is at 123.53 as of 7/29/2021.
The Lean Hog Index increased and is at 112.02 as of 7/28/2021.
Estimated Slaughter for Friday is 439,000, which is above last week’s 434,000 and below last year’s 474,000. Saturday’s slaughter is expected to be 12,000, which is lower than last week’s 29,000 and last year’s 175,000. The estimated total for the week is 2,327,000, which is below last week’s 2,332,000 and last year’s 2,537,000.
September Feeder Cattle opened higher and traded up to the session high at 162.70 as corn was trading lower. Even with corn weakness, Feeders couldn’t stay strong. It broke down past the key level at 162.00 and traded to the session low at 160.825. This is just above support at 160.625. Buyers came back into the market and price recovered to settle at 161.80. This still below the key level at 162.00 so Feeders ended the week under pressure. A breakdown from settlement could see support re-tested at 160.625. Support then comes in from 157.94 – 157.30. If feeders can hold overtake the key level at 162.00, a re-test of resistance at 163.50 is possible.
The Feeder Cattle Index increased and is at 154.04 as of 7/29/2021.
October Live Cattle opened unchanged and made the session high at 128.225. This is just above the key level at 128.10 and bears took over and grinded cattle down to the low at 127.075 by the end of the session. It settled at 127.20. Packers basically told producers to take it or leave it as they were not aggressive in making purchases in the cash market all week. They are raking it in as the cutouts continue their trek higher and they are able to keep cash prices in check. Cash has traded in line with last week and if packers don’t get more aggressive Friday afternoon, producers will have more cattle to sell next week as packers demonstrate their total control over both ends of the market… (producers and consumers). Getting high prices for beef and holding cattle prices in check as supplies are still in the packers’ favor, in my opinion. A breakdown from the low could see price test support at 126.625. Support then comes in at 125.80. If settlement holds, we could see a re-test of the key level at 128.10. Resistance then comes in at the July 27th high at 129.875 and then 130.45.
Boxed beef cutouts were higher as choice cutouts surged 3.24 to 278.46 and select jumped 2.37 to 259.19. The choice/ select spread widened to 19.27 and the load count was 117.
Friday’s estimated slaughter is 114,000, which is above last week’s 110,000 and last year’s 111,000. Saturday’s slaughter is expected to be 58,000, which is below last week’s71,000 and above last year’s 51,000. The estimated total for the week is 649,000, which is above last week’s 648,000 and last year’s 636,000.
The USDA report LM_Ct131 states: hasn’t come out yet
The USDA is indicating cash trades this week for live cattle from 116.00 – 125.00 and 195.00 – 201.00 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, August 5, 2021 at3:00 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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