Walsh Trading Daily Insights
Commentary
April Lean Hogs continued trading within its consolidation band. April Hogs have consolidated between 103.575 and 99.825 since making the low at 98.475 on March 7. Price is still reacting to the head and shoulders top formation which was activated on March 4th on the trendline breakdown. The price objective for this pattern is down at 91.875. Monday’s range was from 102.625 to 101.10 with settlement at 102.20. Settlement was above the key level at 101.975 and this must hold in my opinion or we could see price fall back to support at 100.075. A failure from there could see price move lower to test the March 7th low. This low is right at the 98.475 support level. A breakout above the 103.575 consolidation high could take price up to the next resistance level at 104.35. The upward sloping head and shoulders trendline resistance is next at 105.225. There is a gap from the March 3rd low at 105.05 and the March 4th high at 104.25.
The Pork Cutout Index decreased and is at 105.34 as of 3/11/2022.
The Lean Hog Index increased and is at 100.76 as of 3/10/2022.
Estimated Slaughter for Monday is 479,000, which is above last week’s 467,000 and below last year’s 482,000.
April Feeder Cattle surged on Monday, gap opening higher, closing the gap and then rallying the rest of the day. It made the high at 163.425 and the low at 158.30, with settlement at 162.40. Weaker corn prices gave support to the Feeder market, in my opinion. The surge took price past resistance at the 100-DMA at 163.225 and just below the key level at 163.50. This proved to be strong resistance with the dip at the end of the day to close near (now) support at 162.00. If Feeders can rally past resistance, we could see a test of the declining 50-DMA now at 164.525. Resistance then comes in at 165.775. A failure below support at 162.00 could see price test support at the 200-DMA now at 161.15 and then 160.625.
The Feeder Cattle Index declined and is at 152.31 as of 3/11/2022.
June Live Cattle is now the lead contract as its volume has overtaken the volume in the April contract. It opened higher and made the session low at 132.825. It raced to the session high at 136.55 and then consolidated the rest of the session, settling near the high at 135.70. The rally took price just past resistance at 136.35 and the pullback saw price settle below it. A breakdown from settlement could see price test support at 134.55. If price can rally past 136.35, we could see a test of resistance at 137.875. Resistance then comes in at 138.60.
Boxed beef cutouts increased as choice cutouts rose 0.80 to 255.51 and select increased 0.83 to 249.94. The choice/ select spread narrowed and is at 5.57 and the load count was 83.
Monday’s estimated slaughter is 125,000, which is even with last week and above last year’s 108,000.
The USDA report LM_Ct131 states: So far for Monday negotiated cash trading has been at a standstill in the 5 Area Regions. Last week in the Southern Plains and Nebraska live purchases traded at 138.00 and dressed purchases, in Nebraska, traded at 220.00. Last week in the Western Cornbelt live purchases traded from 138.00- 140.00 and dressed purchases traded from 219.00-222.00.
The USDA is indicating no cash trades for live cattle and 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, March 17, 2022 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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