Walsh Trading Daily Insights
Commentary
October Lean Hogs gap opened lower and traded to the session low at 86.05. It reversed course and surged to the session high at 87.975 and then worked its way lower the rest of the session and settled at 86.975. Weakness in the pork cutouts have traders worrying about demand for pork as exports have been softening while expectations for increased slaughter in the coming months dominate traders’ thoughts. So far slaughter levels have not increased as levels are consistently below last year’s levels, but the normal seasonality expects supply to rise. We’ll see! Settlement was below the key level at 87.10 and if price can overtake this level another test of resistance at 88.325 is possible. The Friday high is next at 89.775. A breakdown from settlement could see support tested at 85.325.
The Pork Cutout Index decreased and is at 118.33 as of 8/23/2021.
The Lean Hog Index increased and is at 107.90 as of 8/20/2021.
Estimated Slaughter for Tuesday is 474,000, which is above last week’s 472,000 and below last year’s 483,000. Monday’s slaughter was revised lower to 437,000. The estimated total for the week (so far) is 911,000, which is below last week’s 949,000 and last year’s 953,000.
October Feeder Cattle rallied to a new high at 172.55 early in the trading session, trading above resistance at 172.00 before failing and breaking down below support at 169.995 to the session low at 169.675. It was able to settle above it at 170.225. A failure to hold the 169.995 support level could see support tested at 167.125. If price can hold settlement, a re-test of resistance at 172.00 is possible. Resistance then comes in at 173.375.
The Feeder Cattle Index ticked lower and is at 155.73 as of 8/20/2021.
October Live Cattle made a new high early in the trading session, reaching 132.85 before breaking down the rest of the session and making the low at the end of the day at 131.60. It settled just above the low at 131.70. The high was just below resistance at 132.95 and this level once again proved too tough a challenge for cattle. If futures can hold settlement a re-test of resistance at 132.925 is possible. A break out above resistance could see price move towards resistance at 134.55. A failure from settlement could see price breakdown to support at 130.45. Support then comes in at 128.10.
Boxed beef cutouts were lower as choice cutouts decreased 0.45 to 347.58 and select fell 2.50 to 316.90. The choice/ select spread widened to 30.68 and the load count was 106.
Tuesday’s estimated slaughter is 120,000, which is below last week’s 121,000 and above last year’s 119,000. Monday’s slaughter was revised lower to 116,000. The estimated total for the week is 236,000, which is below last week’s 240,000 and above last year’s 235,000.
The USDA report LM_Ct131 states: So far for Tuesday negotiated cash trading has been mostly inactive on light demand in the Texas Panhandle, Nebraska and Western Cornbelt. Not enough purchases in these regions for a full market trend. In Kansas negotiated cash trading has been at a standstill. Last week in the Texas Panhandle live purchases traded from 121.00-122.00. In Kansas last week live purchases traded at 122.00. In Nebraska for the prior week live and dressed purchases traded from 125.00-127.00 and at 200.00, respectively. In the Western Cornbelt for the previous week live and dressed purchases traded at 127.00 and from 200.00-205.00, respectively.
The USDA is indicating cash trades for live cattle from 122.00 – 130.00 and at 206.00 – 208.00 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 26, 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
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