Walsh Trading Daily Insights
Commentary
October Lean Hogs surged on Friday, rallying all session and trading up limit at the end of the session but settling just under it at 90.725. The high was at 90.90 and the low came in at 88.325. the low was right at the key level at 88.325 and the high and settlement came in above resistance at 90.40. The rising 200 DMA on the continuous chart looms just above the high at 91.20. If this can be overtaken on continued bullish momentum on Monday, a test of resistance at 92.375 is possible. A failure from 90.40 could see price move towards support at 88.325.
The Pork Cutout Index decreased and is at 113.76 as of 8/26/2021.
The Lean Hog Index was fell and is at 104.79 as of 8/25/2021.
Estimated Slaughter for Friday is 468,000, which is above last week’s 460,000 and below last year’s 478,000. Saturday slaughter is expected to be 116,000, which is above last week’s 85,000 and below last year’s 268,000. The estimated total for the week is expected to be 2,444,000, which is below last week’s 2,445,000 and last year’s 2,653,000.
October Feeder Cattle traded higher early in the trading session, making the session high at 169.20 and then grinding lower to the session low at 167.225. A sharp rebound into the end of the session took price back into the middle of the range and it settled at 168.45. Ho-hum! What excitement in Feeder cattle! The opening strength couldn’t challenge the Thursday high and the low was just above support at 167.125 as trade was lackluster, in my opinion. This was a second attempt to push price below support and it held once again. That is the best thing you can say about Friday’s trading session. A failure from settlement could see support re- tested at 167.125. A failure below support could see a test of support at 165.80. If price can hold settlement, a re-test of resistance at 169.95 is possible. Resistance then comes in at 172.00.
The Feeder Cattle Index increased and is at 159.39 as of 8/26/2021.
October Live Cattle made the session high early in the trading session at 130.075. It traded lower, closing the gap created from Monday’s gap open higher and then tried to rally off the gap closure but it failed sending price lower to the session low at 128.35. The market was able to hold here just a few ticks above support at 128.10, and it recovered off the low to settle at 129.125. The price action was disappointing, putting price back in the consolidation band that Monday’s rally took it out of. A failure from settlement could see price breakdown to re- test support 128.10. If price can hold settlement a re-test of resistance 130.45 is possible. The cash market was extremely quiet and the lack of activity pressured price in my opinion as next week packers will be buying for a shortened slaughter week due to the Labor Day holiday. Slaughter levels will reach a respectable level for the week as Saturday’s slaughter is expected to be strong and if there are no revisions downward on Monday.
Boxed beef cutouts were lower as choice cutouts decreased 1.93 to 345.34 and select fell 4.07 to 315.52. The choice/ select spread narrowed to 29.82 and the load count was 69.
Friday’s estimated slaughter is 116,000, which is even with last week and above last year’s 115,000. Saturday slaughter is expected to be 72,000, which is above last week’s 70,000 and last year’s 66,0000. The estimated total for the week is expected to be 651,000, which is below last week’s 665,000 and last year’s 654,000.
The USDA report LM_Ct131 states: So far for Friday in Kansas, Nebraska and Western Cornbelt negotiated cash trading has been limited on light demand. In Kansas a few live purchases traded steady at 123.00 when compared to Thursday. Not enough purchases in Nebraska and Western Cornbelt for a market trend. In Nebraska last week live purchases traded from 125.00-127.00 and dressed purchases traded at 200.00. In the Western Cornbelt the previous week live and dressed purchases traded at 127.00 and from 200.00- 205.00, respectively. Thus far for Friday in the Texas Panhandle negotiated cash trading has been at a standstill. On Thursday live purchases traded at 123.00.
The USDA is indicating cash trades for live cattle from 120.00 – 130.00 and at 200.00 – 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, September 2, 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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