Walsh Trading Daily Insights
Commentary
June Lean Hogs opened higher, rallied past resistance at 104.35 to the session high at 105.50. The low came in at 102.725 and settlement was at 105.10. It was a nice short-covering rally in my opinion, which didn’t change much technically as the trade session was left with an inside candlestick. The rally stayed within Tuesday’s breakdown candles range but a positive sign is the settlement above 104.35. There is a bullish Wolfe Wave formation in Hogs and a settlement above 106.50 on Thursday could be a positive development. We’ll see…. The short-covering could be a response to support holding at 101.975 with the rising 100-DMA nearby at 101.475. If futures want to continue lower it must break through and settle below support at the rising 100-DMA. This would put support at 100.075 in play. If price can hold above the Wednesday high, we could challenge resistance at 106.85.
The Pork Cutout Index was unchanged and is at 105.38 as of 5/03/2022.
The Lean Hog Index decreased and is at 101.15 as of 5/2/2022.
Estimated Slaughter for Wednesday is 482,000, which is even with last week and below last year’s 485,000. The estimated total for the week (so far) is 1,444,000, which is above last week’s 1,427,000 and below last year’s 1,445,000.
August Feeder Cattle opened lower and broke down to the session low at 174.65 as corn was higher early in the session. Corn failed to hold its rally and Feeders, caught a bid and rallied past Tuesday’s high to the session high at 177.50. It couldn’t hold the rally and fell back, consolidating in the middle of the range and settling at 176.20. This is above the key level at 175.775. The rally however, failed to challenge the April 22nd high at 178.225, which was the high on the first day of August taking over as the lead contract due to the higher volume. A failure below 175.775, could see price test the Wednesday low and then work its way to support at 173.25. If price can hold settlement, we could see a test of the April 22 high at 178.225. Resistance is nearby at 178.95.
The Feeder Cattle Index down ticked and is at 155.75 as of 5/03/2022.
June Live Cattle drifted, unable to gather steam up or down, trading between resistance at 136.35 and touching support at 134.55. The range was at 136.00 to 134.55 with settlement near the low at 134.825. Settlement was just below the rising 200-DMA now at 134.85. If price stays below the 200-DMA, we could see price re-test support at 132.95. Support then comes in at 130.45. If price can rally past resistance at 136.35, we could see price test resistance at 137.875. There is a gap from the April 22nd low at 138.35 and the April 25th high at 136.85.
Boxed beef cutouts increased as choice cutouts rose 0.19 to 259.74 and select increased 0.34 to 247.68. The choice/ select spread narrowed and is at 12.06 and the load count was 131.
Wednesday’s estimated slaughter is 126,000, which is above last week’s 125,000 and last year’s 119,000. The estimated total for the week (so far) is 363,000, which is below last week’s 375,000 and above last year’s 356,000.
The USDA report LM_Ct131 states: Thus far for Wednesday in the Texas Panhandle negotiated cash trading and demand have been moderate. Compared to last week live purchases traded steady at 140.00. In Nebraska negotiated cash trading has been moderate on moderate to good demand. Compared to the prior week both live and dressed purchases traded steady at 146.00 and 232.00, respectively. In Kansas, Colorado and Western Cornbelt negotiated cash trading has been slow with light to moderate demand. In Kansas a few live purchases traded at 140.00. In the Western Cornbelt a few live and dressed purchases traded from 145.00-146.00 and from 230.00-232.00. In Colorado a few live purchases traded at 146.00. However, not enough purchases in any of these regions for a full market trend. Last week in Kansas live purchases traded at 140.00. Last week in Colorado live purchases traded from 146.00-147.00. For the previous week in the Western Cornbelt live and dressed purchases traded from 145.00-147.00 and at 232.00, respectively.
The USDA is indicating cash trades for live cattle from 140.00 – 148.00 and from 228.00 – 234.00 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, May 5, 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
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